Real Estate 101: Understanding the Residential Sales Contract
Did a move come up when creating your vision board for 2026? If that’s the case, let me give you a look into home sales, the most important step of the process: the sales contract! This is a legally binding agreement outlining the terms of the purchase and will detail the price, contingencies, deadlines, closing date, conveyances, and responsibilities of each party.
Offer Price, Financing, & Deposits
The first page of the contract lays the foundation for the offer: who is the buyer and how much are they offering. It will list how much the buyer is putting down, how much they are financing, and what type of loan they are using. This section also includes any seller-paid costs, such as closing cost assistance or requested seller-paid buyer’s brokerage compensation. It gives both parties a clear picture of the financial structure of the offer and can show a buyer's financial strength!
Along with the contract, the buyer submits an Earnest Money Deposit (EMD) within a few days of contract ratification to be held by the settlement company in escrow until closing where it is then applied toward the buyer’s closing costs. However, if a buyer voids the contract without proper cause, the seller may have the right to retain the deposit. You can think of it like a good faith deposit, showing the seller how serious you are as a buyer. A larger amount can give a seller more confidence in your offer, showing you have more to lose if you void out without cause. This is why understanding your deadlines and rights within the contingencies is so important!
Contingencies & Inspections
The residential sales contract also defines any and all conditions that need to be met before settlement. The most common include financing, appraisal, and home inspection contingencies.
If taking a loan, the buyer may choose to retain their financing contingency to protect them as their lender submits their application for underwriting. The Conventional Financing & Appraisal Contingency Addendum will give the buyer a deadline to either deliver a lender commitment letter or deliver a lender rejection letter before the contingency is removed. The appraisal contingency is also part of the Conventional Financing & Appraisal Contingency Addendum where the buyer may have the opportunity to continue with the contract, negotiate the sales price, or void the contract by the agreed upon deadline once an appraised value is given.
A buyer may also choose to make the contract contingent upon a home inspection. If this is the case, the Home Inspection & Radon Testing Contingency Addendum will be added to the contract and a buyer will have the opportunity to inspect the property with a professional licensed and insured inspector. The buyer then may have the opportunity to void out of the contract after the results of the inspection or negotiate repairs with the seller.
Property Details
The contract also outlines the property’s systems and utilities (such as type of heat, air conditioning, and sewer), inclusions and conveyances (what stays with the home such as appliances, parking spaces, light fixtures, etc.), and any as-is items that are part of the sale (for example, “the ice maker conveys in as-is condition”). If the home is part of a Home Owners Association (HOA) or Condominium Association, the contract specifies that the buyer will have the opportunity to review the association documents and resale package disclosures provided by the seller.
Now this may feel like information overload at first, but understanding the Virginia Residential Sales Contract and taking the time to review each section will help both buyers and sellers feel more confident and prepared when it’s time to make or review an offer. In the next few weeks, I will share more in-depth looks at each addendum we often see included in offers!
If you’re thinking about buying or selling here in Alexandria, I would love to be your local guide. My team, The Patterson Group of TTR Sotheby’s International Realty, is here to assist you through each step, answer your questions, and make the process seamless.
Contact me at Margaret@pattersonrealestategroup.com or call our office at 703-310-6201 to get started!
