Real Estate Transactions Recap

Every real estate transaction follows six phases: lead identification, contract negotiation, due diligence, financing, closing, and post-closing. Residential deals close in 30-45 days; commercial deals require 60-90 days or more. The Purchase and Sale Agreement (PSA) is the legally binding contract that governs the transaction, requiring parties, property description, price, terms, contingencies, closing date, and signatures.

Earnest money (1-3% residential, 3-10% commercial) demonstrates buyer commitment and becomes the primary financial risk during the contract period. Deposits are held in escrow by a neutral third party and applied toward the purchase price at closing. Understanding when earnest money becomes non-refundable is one of the most critical aspects of transaction risk management.

The five core contingencies — inspection, financing, appraisal, title, and environmental — protect buyers from property defects, loan denial, overvaluation, title defects, and contamination respectively. Each contingency has a deadline; missing it may result in automatic waiver. Active removal requires explicit written waiver, while passive removal expires automatically.

Transaction management tools and checklists ensure that the 40-120 action items in a typical transaction are tracked and completed on time. Market conditions (seller's, balanced, or buyer's market) fundamentally alter negotiation leverage, contingency strategy, and pricing. Investment strategy further shapes contract terms — from conservative buy-and-hold contingencies to aggressive wholesaler assignment clauses. Adapting your transaction approach to both market conditions and investment goals is the mark of a sophisticated real estate practitioner.