Understanding the Residential Contract

Navigating a residential real estate contract can feel overwhelming, but it’s essentially a roadmap for your home sale or purchase. As a realtor licensed in both Tennessee and Mississippi, I’ll break down the key sections of the standard contracts used in each state (Tennessee’s RF 401 Purchase and Sale Agreement and Mississippi’s F1 Contract for the Sale and Purchase of Real Estate). These are similar in structure but have state-specific nuances. Think of this as a friendly guide to demystify the process—reducing anxiety by explaining what each part means in plain English. Remember, this isn’t legal advice; always consult an attorney or your realtor for your specific situation.

Parties

This section identifies who’s involved in the deal: the buyer(s) and seller(s). It’s straightforward—who’s agreeing to buy and who’s agreeing to sell.

• In Tennessee (RF 401): Lists the buyer and seller names, emphasizing that both agree to the terms. It also notes that the contract is between these parties only, and realtors are facilitators, not parties.
• In Mississippi (F1): Similar, with spaces for buyer and seller names. It stresses that the buyer agrees to buy and the seller to sell under the outlined terms.

Layman’s Take: This is like naming the players in a game. It ensures everyone knows who’s responsible—the seller for delivering good title and the property as agreed, and the buyer for funding the sale with the specified consideration. No surprises here; just confirm your name is spelled correctly!

Property

Describes the property being sold, including what’s included (like appliances) and what’s not.

• In Tennessee (RF 401): Details the address, legal description (e.g., county, deed book), and includes fixtures like built-in appliances, lighting, and landscaping unless excluded. Items that stay or go (e.g., refrigerator) are specified.
• In Mississippi (F1): Similar address and tax parcel details, plus a list of included items (e.g., ceiling fans, security systems, pools). Excludes anything specifically noted as not staying.

Layman’s Take: This provides the closing agent with recorded deed information for title searches and deed preparation, while the tax parcel number offers a second verifiable source of property identity. It also prevents arguments over “Does the refrigerator come with the house?” Everything from the stove to the pool table is clarified upfront. If something special (like a family heirloom chandelier) isn’t staying, note it here to avoid stress later.

Price

States how much the buyer will pay and how.

• In Tennessee (RF 401): Specifies the purchase price in dollars, paid at closing via wire transfer or certified check.
• In Mississippi (F1): Same—purchase price in dollars, paid by wire, cashier’s check, or approved method.

Layman’s Take: This is the bottom line: what you’re paying or receiving. It’s fixed unless contingencies change it. Double-check the math and ensure it matches your budget or expectations.

Earnest Money

The buyer’s “good faith” deposit to show they’re serious.

• In Tennessee (RF 401): Amount specified, held by a broker in trust. If the deal closes, it applies to the price; if not, rules dictate refunds or forfeitures (e.g., buyer default means seller keeps it).
• In Mississippi (F1): Similar deposit process, with options for who holds it. Details on refunds if the deal falls through due to contingencies vs. buyer fault.

Layman’s Take: Think of it as a security deposit—it’s refundable if things go south for valid reasons (like a failed inspection). It protects the seller in the event they suffer loss due to the buyer breaching the terms of the agreement.

Financing

Outlines how the buyer will pay, including loan contingencies.

• In Tennessee (RF 401): Contingent on buyer securing a loan (if applicable), with deadlines for application. Specifies loan types (e.g., FHA, VA) and appraisal requirements.
• In Mississippi (F1): Loan contingency if checked, with buyer required to apply promptly. Appraisal must meet or exceed price; otherwise, buyer can back out.

Layman’s Take: Most residential transactions involve the buyer getting a loan. A conventional loan is typically backed by Fannie Mae and Freddie Mac, while FHA, VA, USDA, and other programs are usually federally insured. If the buyer is getting a loan, this is the place to specify the type and the percentage amount being obtained. Sellers should be aware of the common contingencies that accompany loans: an appraisal will be ordered, and the home must appraise for the purchase price. If your home is overpriced, the appraiser will set the fair market value for lending purposes. This is why it’s important to price your home competitively.

Closing Costs

Who pays what at closing.

• In Tennessee (RF 401): Prorates taxes, utilities, and HOA fees. Seller often pays title insurance; buyer covers loan-related costs. Seller contributions (e.g., toward buyer’s costs) can be negotiated.
• In Mississippi (F1): Similar prorations. Seller pays for title transfer; buyer for financing fees. Options for seller concessions to offset buyer’s expenses.

Layman’s Take: Proration is common for ongoing expenses like property taxes. Utilities and insurance are usually established new for the buyer, with the seller terminating those relationships as of closing day. What’s important here is identifying who pays for the title search, title insurance, and deed preparation. The lender will have additional closing costs for the buyer, including but not limited to credit checks, appraisals, loan origination fees, document prep fees, and interest rate buy-downs. In some cases, the buyer may not have the money for these and will ask the seller to pay out of the proceeds. I’ve seen this range from 1% to 4%, with 2% to 3% most common in transactions involving “seller concessions.” The seller doesn’t have to agree, but they may lose the buyer in the process. That’s real estate—not every pair of parties is right for each other. It’s a negotiation.

Contingencies

Conditions that must be met for the deal to proceed, like inspections.

• In Tennessee (RF 401): Includes loan approval, appraisal, inspections (home, termite), and title issues. Buyer has time to inspect and negotiate repairs.
• In Mississippi (F1): Loan, appraisal, and inspection contingencies. 10 business days for inspections; options to cancel, waive, or request repairs.

Layman’s Take: These are in place to ensure consumer protections and transparency throughout the process. It’s empowering—knowledge reduces surprises. Home inspections aren’t typically required by lenders but are encouraged and common for buyers, providing a report on any material defects or deferred maintenance. Appraisals ensure collateral protection for the investor funding the loan and confirm the property meets minimum standards for secondary mortgage markets. If the appraiser requires repairs, they must be completed before closing, with a re-inspection and completion report provided to the lender. If repair issues from the home inspection or appraisal can’t be amicably negotiated, the contract fails, and earnest money is refunded to the buyer.

Legal

Covers warranties, disclosures, and dispute resolution.

• In Tennessee (RF 401): Requires property condition disclosures (e.g., lead paint, floods). Title must be clear; no warranties beyond what’s stated. Includes wire fraud warnings and broker limitations.
• In Mississippi (F1): Property sold “as is” unless warranted. Mandatory disclosures for lead, floods, etc. Title assurances and proration of taxes/utilities.

Layman’s Take: This protects against fraud (e.g., wire scams) and ensures transparency (disclosures flag known problems). It’s reassuring—laws require honesty, and brokers aren’t liable for property issues. The seller is required to provide a Property Disclosure Form to Get Real at the time of listing, which will be posted on the Get Real listing page and MLS. The closing agent will ensure the title is clear and all other legal issues are resolved prior to closing.

Special Stipulations and Exhibits

Custom add-ons or attachments.

• In Tennessee (RF 401): Space for unique terms (e.g., “seller fixes fence”). Attachments like lead disclosure or HOA docs.
• In Mississippi (F1): Similar section for stipulations; checklists for addendums (e.g., earnest money escrow).

Layman’s Take: Often, this is where the buyer requests the seller pay closing costs from the proceeds, or where terms like requiring a survey are added. Be sure to read them carefully. In the exhibits section, you can identify any addenda being attached—e.g., Lead-Based Paint Disclosure and pamphlet (for homes built prior to 1978), tax assessor record or map, FHA/VA Addendum, etc.

Signatures

Where everyone signs to make it official.

• In Tennessee (RF 401): Signatures, dates, and agent info. Includes acceptance/rejection options.
• In Mississippi (F1): Buyer/seller signatures with dates; broker contacts. Notes electronic signatures are binding.

Layman’s Take: The buyer signs the offer initially. For the seller, this is the place to respond. You have three options, and they should all be done in writing: 1) Accept, 2) Counter, or 3) Reject. Acceptance means you agree to all terms. If you counter, mark it as such, sign the form, then go to getrealsold.com and fill out the counter offer form from your dashboard—it will be sent back to the buyer, who can then accept, counter, or reject. The process continues until one party accepts. If you reject, mark the contract accordingly, sign, and send it back. It’s not a good idea to ignore an offer; document your rejection on paper. Documentation is key in real estate transactions.

In both states, these contracts prioritize fairness and clarity, helping you feel lawfully protected. Tennessee often emphasizes consumer protections (e.g., more disclosure forms), while Mississippi focuses on “as is” sales with strong inspection rights. If you’re selling with Get Real Realty’s Basic Package, use your eTools and getrealhome.com community for support—these contracts align with DIY elements like self-managed showings. Questions? Ask them here on getrealhome.com—we’re here to guide you stress-free!