A home buyer purchase contract is a contract between a buyer and a seller of property that lists the conditions that must be met before the ownership is transferred, explains Nolo. Contingencies are built into the contract to give the buyer an out if the contingencies are not met.
A contract comes together when both the buyer and the seller of a piece of property accept the terms of the latest offers and counteroffers from the other parties, notes Nolo. The contract must have a signature to ensure both parties have signed off and accept the terms as is, indicating a mutual agreement and a binding contract.
The contract builds in a certain amount of time, usually a few weeks, between the point when the contract is signed and the closing takes place. In some states, this is known as escrow, says Nolo. During this time frame, the buyer and seller work to remove the contingencies, such as securing financing and scheduling inspections, and advise each party as to the progress being made. If either party fails to remove the contingencies, the contract is either cancelled or the parties can renegotiate. If either party backs out of the contract for reasons other than the contingencies, money may be forfeited.