Reading and reviewing a Colorado real estate contract when you’re in the heat of the moment buying or selling a home can be stressful. Understanding this contract BEFORE you dive into a transaction can make the whole process smoother. That’s what we’ll do in this post!
As you review the key sections below you can follow along with this blank 2024 Real Estate Contract.
Before we dive in we should state that we are not real estate attorneys. If you’d like a real estate attorney to review your Colorado Real Estate Contract we can refer you to one.
Key Sections of the Real Estate Contract:
What’s Included in the Deal?
Sections 2.5 and 2.6 outline what’s included or excluded in the sale. It’s important to review this section in close detail to make sure something isn’t overlooked. Key items to think about are appliances, washers, dryers, special light fixtures, hot tubs, or family heirlooms! Talk to your agent about these things early to avoid any misunderstandings.
Deadlines Matter
The contract includes a handy spreadsheet of deadlines in Section 3. Keep an eye on these, and don’t hesitate to lean on your broker for help in managing these deadlines! Both buyers and sellers have deadlines to adhere to, and if they aren’t met there can be significant consequences, including going into default and for buyers possibly losing their Earnest Money. Some of the most important deadlines are typically related to the buyer’s inspection, the appraisal, the title work and the buyer’s loan availability deadline. An experienced agent can help you craft these dates in an appropriate fashion and make sure you stay on track.
Show Me the (Earnest) Money
Section 4.3 covers earnest money. This shows you’re serious about buying and is usually refundable if you terminate before certain deadlines. Again, those deadlines matter and as your agent we’ll always help you monitor those key deadlines.
Financing Fundamentals
Section 5 deals with loans. Stay on top of the status of the financing for the transaction – it’s the second most common reason deals fall through!
Appraisal Awareness
If the home doesn’t appraise for the offer price, Section 6 comes into play. If the appraisal comes in low, this could lead to renegotiations or even termination of the contract.
HOA Homework
If there’s an HOA involved, Section 7 is crucial. We will help our sellers provide these documents to our buyers and we’ll make sure our buyers get them reviewed!
Title Talk
Section 8 ensures you’re getting clear title. We, along with the title company, will help you understand and navigate this. It’s also a complex area, so when something is unusual we’ll be referring you to a real estate attorney for assistance. (The real estate commission wisely does not want real estate agents “playing attorney”.
Inspection Insights
Section 10 covers inspections – the #1 reason deals can fall apart. The inspection phase is the buyer’s chance to really know what they’re buying. It’s not uncommon for there to be some issues with any home, and how those issues get addressed will be a negotiation point between the buyer and seller during the inspection phase. Your agent will help guide you through this process and be your advocate!
Closing Costs and Extras
Sections 15 and 16 deal with closing costs and prorations. Who pays these fees? Much of that is dependent on the status of the market. Is it a “Buyer’s market” or a “Seller’s market”? Your agent can help you understand who has the leverage given the market conditions.
Buyer’s Broker Firm Compensation
Section 29 outlines who is paying the Buyer’s Broker Firm compensation in the transaction. This can potentially have big financial impacts on both the buyer and seller. Always review this section and make sure it’s in alignment with the compensation section of your agency agreement with your agent. (that applies to both buyers and sellers!)
Additional Provisions
Section 30, Additional Provisions, allows for unique clauses. Always read these carefully and consult your broker or attorney if needed.
Remember, every transaction is unique, and this contract changes yearly. While this overview gives you a head start, always read your specific contract thoroughly and don’t hesitate to ask questions. We hope this helps you move into your move with comfort and peace of mind knowing your way around the real estate contract!
