5 Important Real Estate Contract Terms Every Buyer & Seller Should Understand

By Megan & Erl Brown | Realtor Team | Maine Real Estate Experts

Real estate contracts can feel overwhelming — full of legal language, deadlines, and fine print. That’s why having the right real estate agent (or team!) matters. Our job isn’t just to get you under contract — it’s to walk you through every single step, explain what everything means, and make sure you always know what to expect.

Here are five essential contract terms every buyer and seller should understand before signing — and why having an experienced, communicative agent by your side is so important.

1. Contingencies

What it means: Conditions that must be met before the sale becomes final.

Common examples: • Home inspection • Financing (mortgage approval) • Appraisal • Sale of the buyer’s current home

Why it matters: Contingencies protect the buyer. If a condition isn’t met, you may be able to renegotiate or walk away without losing your earnest money.

Our role as your agents: We explain each contingency in plain English, help you understand the risk of waiving or keeping them, and guide you in balancing competitiveness with protection.

2. Earnest Money Deposit (EMD)

What it means: A good-faith deposit showing the buyer is serious about purchasing the property.

Typical amount: Usually 1%–3% of the purchase price (varies by market).

Why it matters: If contingencies aren’t met, buyers typically get this money back. If a buyer walks away without cause, the seller may keep it.

Our role as your agents: We make sure you understand when your earnest money is protected — and when it’s at risk — so there are no surprises.

3. Purchase Price & Financing Terms

What it means: The agreed-upon price and how the buyer will pay.

Includes: • Loan amount • Mortgage type (fixed or adjustable) • Cash vs. financing • Deadlines for loan approval

Why it matters: Missed financing deadlines can cancel deals.

Our role as your agents: We track deadlines, communicate with lenders, and keep everything moving smoothly so financing doesn’t become a last-minute issue.

4. Closing Date & Possession

What it means: When ownership transfers — and when the buyer can move in.

Key points: • Closing date • Possession timing • Rent-back agreements, if applicable

Why it matters: Misunderstandings here can cause stress, moving delays, or legal issues.

Our role as your agents: We confirm exactly when possession happens and make sure everyone is on the same page well before closing day.

5. Repair Requests & Credits

What it means: Negotiations that happen after the inspection.

Possible outcomes: • Seller completes repairs • Credit at closing • Price adjustment • No changes

Why it matters: This is where many deals are renegotiated — or fall apart.

Our role as your agents: We help you focus on what truly matters (safety and structural concerns) and negotiate strategically to make sure your goals are met.

Why Understanding These Terms Matters

Knowing the basics helps you: ✔ Avoid costly surprises ✔ Negotiate with confidence ✔ Protect your investment ✔ Reduce stress throughout the process

A great real estate agent — or team — will walk you through every clause, keep you informed at every stage, and communicate consistently so you always know what’s coming next. Understanding the process puts you in control — and that’s exactly how it should feel!