The Must Do Checklist Before You Send the Contract to Sign

Before you send a real estate purchase contract to sign, you need to complete a detailed checklist that protects your interests, confirms the property is as represented, confirms you can actually close the deal, and prevents costly surprises after commitment. This checklist spans financial readiness, property inspection, title verification, and legal review, and it applies whether you are buying, selling, or both.

TL;DR

• Verify financing approval, get a pre-approval letter, confirm down payment funds are accessible, and understand your actual borrowing capacity before committing.
• Inspect the property thoroughly (general inspection, pest inspection, roof, foundation, systems), review the seller's disclosure forms, and verify that utilities, zoning, and easements support your intended use.
• Confirm title is clear via preliminary title report, review all contract terms (contingencies, repair timelines, closing costs, earnest money), and have an attorney review the document before signing.

Financial Readiness and Pre-Approval

Your first step is to confirm you can actually afford the purchase. Do not sign a contract without a mortgage pre-approval letter from a lender. A pre-approval (not a pre-qualification) is a lender's conditional commitment to loan you money based on a hard pull of your credit, employment verification, income documentation, and asset verification.

Confirm the pre-approval amount covers the purchase price minus your down payment. If you are putting down 20%, a purchase price of $500,000 requires a $100,000 down payment and a $400,000 loan. Your pre-approval should be for at least $400,000.

Verify that your down payment funds are liquid and accessible. Lenders require a paper trail: bank statements, gift letters (if a relative is funding part of the down payment), proof of sale of other assets, or documentation of investments. If you cannot show the funds exist and belong to you, the lender will deny the loan at the last moment, and you will lose your earnest money and the deal.

Check that your credit score has not dropped since pre-approval. Even minor score changes can affect interest rates. Some lenders pull credit again at closing. Large new purchases, opening new credit lines, or missed payments between pre-approval and closing can disqualify you.

Understand your debt-to-income ratio. Most lenders cap the total of your monthly debts (including the new mortgage payment) at 43% to 50% of gross monthly income. If your new mortgage, car payment, student loan, and credit cards exceed that threshold, you will not qualify. Ask your lender for a debt-to-income calculation before you commit to an offer.

Property Inspection and Physical Condition

Never sign a purchase contract without scheduling a professional home inspection. A home inspector examines the roof, foundation, framing, electrical system, plumbing, HVAC, windows, doors, and structural integrity. This inspection typically costs $300 to $600 and takes two to three hours. Many purchase contracts include a contingency period (often 7 to 10 days) for inspection, so schedule it immediately after the contract is signed.

However, before you sign, you should drive by the property multiple times, at different times of day, walk the perimeter, and look at the roof pitch, gutters, siding, and foundation from ground level. If you spot obvious red flags (sagging roof, cracked foundation, boarded windows, signs of water damage), reconsider the offer or make it contingent on professional inspection with a right to walk away if major defects are found.

Pest and termite inspection is separate from the general home inspection and is mandatory in many jurisdictions or required by lenders in certain regions. This inspection costs $75 to $150 and checks for wood-destroying insects, rodents, and other pests. Many purchase contracts allow a pest inspection during the due diligence period.

If the property has a pool, septic system, well, or commercial systems, budget for specialized inspections. A pool inspection is often $200 to $400. A septic system inspection is $300 to $500. A well water test is $100 to $300. A commercial HVAC or boiler inspection is $150 to $400. These are not routine and are often overlooked, but they can reveal expensive failures.

Review the seller's disclosure forms. In most jurisdictions, sellers must disclose known defects, prior repairs, insurance claims, water damage, floods, mold, pest infestations, and other material facts about the property. These disclosures are often called a Property Condition Disclosure, Seller Disclosure Statement, or Transfer Disclosure Statement (depending on your state). Read every page. Ask the seller's agent to clarify any vague or concerning disclosures. Do not sign the contract until you understand what the seller is telling you (or what they are deliberately omitting).

Title Verification and Clarity

Before you sign, request a preliminary title report from the title company. This report is usually free and shows what title insurance will cover, what liens or encumbrances exist on the property, and what exceptions the title insurance will exclude. A lien is a claim against the property; if the owner owes back taxes, the county has a tax lien. If the owner failed to pay a contractor, the contractor may have filed a mechanic's lien. If the owner owes a mortgage or home equity line of credit, those are liens too.

Review the preliminary title report carefully. Ask the seller's agent or the title company to explain any liens, easements, or covenants. Easements allow others (utilities, neighbors, municipalities) to use parts of the property for defined purposes, like power lines or drainage. Covenants are rules imposed by a homeowner association or a prior deed that restrict how you use the property (no commercial business, no exterior color changes, mandatory architectural approval).

Ask whether the property is subject to homeowner association fees and CC&Rs (Covenants, Conditions, and Restrictions). Membership is usually mandatory and non-negotiable; fees are enforceable. Request the HOA documents (bylaws, budget, meeting minutes, reserve study) and review them before signing. Some associations have special assessments pending or reserves that are depleted, which will cost you thousands.

Verify that the property address and legal description match the contract. Title is conveyed based on the legal description, which is found on the deed and the title report. If the legal description is wrong, the title transfer can fail or create disputes later.

Zoning, Utilities, and Land Use

Confirm that the zoning allows your intended use. If you plan to run a home business, rent rooms, or operate a daycare, check the zoning code at the municipal planning office. Zoning can prohibit these uses. Zoning changes are slow and expensive. Do not assume permission based on what a neighbor is doing; enforcement is inconsistent.

Call the utility companies (electric, gas, water, sewer, internet) to confirm that all utilities are available and that no past-due accounts exist on the property. If the property relies on a well or septic system rather than municipal water and sewer, have those systems inspected. Some older septic systems fail, and replacement can cost $10,000 to $25,000 or more.

Ask the seller whether the property is in a flood zone. Most mortgage lenders require flood insurance if the property is in a federally designated flood zone. Flood insurance is not cheap and is required for the life of the loan. You can check flood zone designation using the FEMA flood map at no cost. If the property is in a flood zone, factor flood insurance into your monthly payment estimate.

Verify that the property has legal and physical access. If the property is served by a private road or driveway, confirm that you have a recorded easement granting you perpetual access and the right to maintain it. Landlocked properties (with no public road access) are difficult to finance and sell.

Contract Review and Legal Terms

Do not sign the purchase contract without reading every single word. Hire a real estate attorney to review it before you sign. Attorney review typically costs $300 to $800 and can save you tens of thousands of dollars by catching problematic language.

Confirm the purchase price, down payment, and loan amount. Verify the earnest money amount (the deposit you make when you sign the contract to show good faith). Understand what happens to earnest money if the deal falls through: if a legitimate contingency fails (inspection, appraisal, financing), you usually get it back. If you back out without a contingency, you usually lose it.

Review contingencies carefully. Standard contingencies include financing approval, appraisal (the lender's appraisal must support the purchase price), home inspection, title clearance, and seller's disclosure review. If any contingency allows you to withdraw without losing earnest money, note the deadline. Many sellers are removing contingencies to make offers more competitive, but this increases your risk.

Confirm the timeline: when does closing occur, when is inspection due, when is your right to walk away, when does the seller vacate. Short timelines (10 days to inspection, 21 days to closing) limit your ability to arrange financing, inspect thoroughly, or negotiate repairs.

Clarify who pays for what. Do you pay for the appraisal, survey, inspection, title insurance, home warranty, property taxes, homeowner's insurance, HOA transfer fees? These costs add up. In some markets, the buyer pays most costs. In others, the seller covers more. Negotiate explicitly.

Understand repair obligations. If the inspection reveals a defect, you typically have the right to request repairs or credits. Agree in advance on who performs repairs, to what standard, and what happens if the seller refuses. Some contracts cap repair requests at a percentage of the purchase price or exclude certain items entirely.

Confirm the closing date and understand your obligation to close. If you do not close on time without a valid reason, the seller may sue you or keep your earnest money. Similarly, if the seller does not close, you may have legal recourse, but litigation is expensive and slow.

Final Walkthrough and Signatures

After your attorney has reviewed the contract and you have received pre-approval, completed inspections, and confirmed title, you are ready to sign. Before you sign, have your attorney review any amendments or rider pages the seller proposes.

Sign the contract in the presence of the appropriate parties (your agent, the seller's agent, or an attorney). Both you and the seller must sign for the contract to be binding. Do not rely on email signatures alone; confirm that your signature is an original or a valid electronic signature per your state's requirements.

Keep a fully executed copy (signed by all parties). This is your proof of the binding agreement and contains all the terms for the transaction.

Frequently Asked Questions

What if the appraisal comes in lower than the purchase price?

The lender will only loan based on the appraised value, not the contract price. If the appraisal is $480,000 but you agreed to pay $500,000, you must come up with the additional $20,000 in cash, or negotiate the seller down, or walk away (if your contingency allows). An appraisal contingency protects you by allowing you to withdraw if the appraisal does not support the price. Confirm this contingency is in your contract.

Can I negotiate repairs after I sign the contract?

Yes, usually. Most contracts include a period (often 7 to 10 days) for inspection and negotiation. After you receive the inspection report, you can request that the seller repair defects, credit you money to make repairs yourself, or accept the property as is. The seller can accept, counter-offer, or refuse. If you cannot agree and your contingency allows, you can withdraw. But this happens after you sign, so the contract must allow for it.

What does it mean if the title has "exceptions"?

Title insurance exceptions are items that the insurer will not cover. Common exceptions include easements (like utility easements), covenants (like HOA rules), and property taxes. These are not defects; they are normal. But some exceptions can significantly affect property value or use. Have your attorney explain any exceptions you do not understand before you sign.

Who orders the appraisal, and when does it happen?

The lender orders the appraisal, usually within one week of loan approval. The appraisal typically costs $400 to $600 and takes one to two weeks. You cannot force the timeline, but you can follow up with your lender to ensure it is ordered promptly. Most contracts include an appraisal contingency that gives you a way out if the appraisal is lower than the purchase price.

Sources

• U.S. Census Bureau, QuickFacts, housing, ownership, and local market context.
• U.S. Department of Housing and Urban Development, official guidance on buying, financing, and distressed property.
• GoliathData real-estate records, distressed-property and market data compiled from public records.