What Should Be Included in a Real Estate Contract?

A purchase agreement can look complete and still leave the hard questions unanswered. Who gets the earnest money if financing falls through? Does the refrigerator stay? What happens if the appraisal comes in low?

I tell buyers and sellers to read the contract as instructions for the whole transaction, not just a page with a price and closing date. Here are the terms I would expect to review in a Mississippi purchase agreement, and the details I would not leave to assumption.

Identify the parties and the property

Start with the full legal names of the buyer and seller. Make sure the agreement identifies anyone else who owns the property or will take title. The parties’ contact information belongs in the agreement too. (PNC)

Identify the property clearly. A street address is useful, but make sure the legal description matches the property the parties intend to buy and sell. PNC says, “This may include both a street address and a legal description.” (PNC)

Review what the seller must provide regarding title. The American Bar Association says the agreement should include a “provision that the seller will provide good title to the home or what is sometimes called marketable title.” (American Bar Association) Ask who will handle title work and what happens if an issue comes up.

A form is a starting point, not a reason to skip the fine print. The ABA notes that a purchase contract is often “a standard form contract with any necessary riders attached.” (American Bar Association) Read every attached rider and make sure it fits the deal you are making.

Write down the price and earnest-money terms

Put the purchase price in writing, along with how the buyer plans to pay. State whether the offer is cash or depends on financing, and include the financing details that matter to the transaction. PNC identifies cash, a mortgage loan, and alternative financing as possible ways to describe the buyer’s plan. (PNC)

The agreement should state how much earnest money is due, when it is due, who will hold it, and how it will be credited at closing or returned if the sale does not proceed. PNC describes earnest money as “a security deposit that offers the sellers some assurance of the buyer’s intentions to complete the purchase.” (PNC)

Do not assume the deposit is automatically forfeited if the deal ends. The ABA recommends addressing when earnest money is returned, including when a buyer cannot obtain financing after reasonable or good-faith efforts. (American Bar Association) The contract should say what conditions protect the deposit and what steps the buyer must take to qualify for its return.

Investopedia reports that earnest money is typically 1% or 2% of the sale price. (Investopedia) On Zillow’s $194,531 average Mississippi home value, 1% to 2% is about $1,945 to $3,891. (Zillow) The amount is a negotiated contract term, not a required deposit for any particular home.

Make the contingencies specific

A contingency describes a condition that must be met, or a right a party can use if it is not met. Freddie Mac says, “Contingencies are specific conditions you can add to your home purchase agreement to protect yourself.” (Freddie Mac) The key details are what the agreement requires, by what date, and what the parties can do next.

A financing contingency should identify the kind of loan the buyer intends to seek, the relevant loan terms, and the deadline for obtaining approval. The ABA describes a mortgage contingency as setting out a specified loan amount, interest rate, and period of time. (American Bar Association) Investopedia says a financing contingency can give the buyer time to obtain a mortgage and a right to cancel if financing is denied. (Investopedia)

An inspection contingency should spell out when the inspection must happen and what options the buyer has after reviewing the results. The ABA describes an inspection as usually occurring within 10 days of the contract date. (American Bar Association) That is a general reference point, not a Mississippi deadline for every agreement. The signed contract’s written deadline is the one to watch.

Appraisal language matters too. Investopedia explains that an appraisal contingency can give the buyer a right to back out if the professional appraisal is below a specified minimum. (Investopedia) Decide what happens if the appraisal is low. The agreement might address renegotiating, bringing additional funds, or ending the deal under stated conditions. Do not assume the lender’s appraisal automatically changes the purchase price.

Write the contingency terms clearly enough that both sides understand what happens if a condition is not met. Investopedia says, “Any contingency clause should be written and outlined clearly enough for all parties to understand the terms.” (Investopedia) Ambiguous wording can create a dispute when the parties need a clear answer.

Set deadlines, closing details, and what conveys

List the important dates and the action due on each date: deposit delivery, inspection, financing, appraisal, closing, and possession. PNC says a purchase agreement’s timeline can include deadlines for completing the inspection and appraisal. (PNC) Use actual calendar dates where the form allows it, and be clear about how each deadline is calculated.

Financing timelines vary. The ABA says sellers usually allow 30 to 60 days for a buyer to obtain a loan commitment. (American Bar Association) Freddie Mac says it typically takes 30 to 45 days to close a loan after an offer is accepted. (Freddie Mac) Those are general reference points, not substitutes for the dates in the signed agreement.

Be precise about what stays with the property. List appliances, light fixtures, window treatments, and other items that matter to either party. The ABA identifies items such as “wall-to-wall carpeting, window treatments, appliances, or lighting fixtures” as things to address. (American Bar Association) Name excluded items too. If the seller intends to remove a fixture, say so in writing.

Check closing costs, taxes, title-related expenses, and who is responsible for them. State when the buyer gets possession and keys, who maintains insurance until closing, and whether there will be a final walk-through. The ABA recommends addressing insurance responsibility through closing and a pre-closing walk-through. (American Bar Association)

Know what happens if the deal hits a problem

Before signing, read the provisions about default, notice, and earnest money. Ask what the buyer must do if a loan is denied, an inspection raises concerns, or an appraisal is below the contract’s threshold. Ask what the seller can do if the buyer misses a deadline or does not close. Do not assume every missed obligation has the same result.

Look for required notices, response periods, and any opportunity to fix a problem. Check how the contract handles a dispute over the deposit. The ABA says the contract should address return of earnest money when a sale does not close in specified circumstances. (American Bar Association)

Attorney review may be addressed in a rider. The ABA says one common rider allows attorney approval within a short period, usually five to ten days after acceptance of the offer. (American Bar Association) Whether that type of provision is appropriate depends on the contract and the parties’ circumstances.

National consumer guides do not establish Mississippi-specific contract requirements. Do not use a generic online checklist as a substitute for reviewing the actual Mississippi contract and its addenda. If a clause is unclear, ask a Mississippi real estate attorney to explain its effect before you sign. Pay particular attention to default, cancellation, and deposit language.

Frequently asked questions

The takeaway

Before you sign, read every deadline and every clause that affects your deposit, cancellation rights, or possession. If you cannot explain what happens when a contingency fails or a deadline is missed, get that language clarified before the agreement becomes final.