market value of a property is the 

amount you’re willing to pay to buy it. The 

appraised value, on the other hand, is 

what a real estate appraiser working for  

a lender believes it is worth, based on  

comparable houses in the community  

and his or her judgment and experience. 

  The appraised value determines the 

size of the mortgage loan a lender will 

provide. If it’s less than you need to buy 

the home, you may need to increase 

your down payment, find another 

lender, or change your plans. 

on local custom. The maximum is rarely 

more than 10% of the purchase price and 

may be less. The balance of the down  

payment is due at the closing.

If the sale falls through, you may or 

may not get the deposit back, depending 

on whether or not there is a contingency 

clause to this effect in the contract. Unless 

a contingency is standard practice, such 

as one voiding the contract if the buyer 

can’t find a mortgage, one or the other 

party may not be willing to agree to 

including it.

There’s no way to predict how long  

contract negotiations may take. They  

can move along briskly, but they can  

also be stalled if you, the seller, or your  

representatives can’t agree on all the 

details. And since there are a number of 

people involved—the seller, the seller’s 

agent, the seller’s attorney, you, your 

agent, and your attorney—making even 

minor changes to the agreement and  

getting them approved can take time. One 

risk you face is that until the contract is 

signed, the seller may receive a higher 

offer and reject yours. 

The period before you sign is probably 

the last opportunity you’ll have to revise 

your offer if the inspection has turned up 

any problems with the home. This means 

you’ll want to have the report in your 

hands before the contract discussions end.


You, as the buyer, must be able to obtain  

free and clear title to the property.  

The title provides assurance that no other 

person, organization, or government has 

any legal or financial claim that would 

limit ownership rights. Without this title, 

you take the risk of losing the money 

invested in the property should there ever 

be a court-imposed settlement requiring 

the new owner to make good on a claim.

To obtain this title, you pay a title 

company or title attorney to examine the 

public record for any outstanding claims 

against the property and provide title 

insurance to protect your lender’s  

interest in the property. You can also  

protect your equity by buying owner’s  

coverage for an extra charge.





When representatives for you and the 

seller have agreed to the terms of the 

contract, you both sign the document. You 

typically make a cash down payment to the 

seller’s agent, which is held in reserve in 


escrow account until the sale is final-

ized. The amount of the required payment 

is stated in the contract, and varies based 


Sellers may be willing to accept a reduced 

price or to hold part of the mortgage if 

you’re unable to borrow the full amount, 

especially if they’re eager to sell. Real estate 

brokers may agree to a reduced commission 

if a sale is stalled over price, especially if  

a representative from the listing firm is  

handling the transaction.


Buyers or sellers can add contingencies, or 

conditions, to a real estate contract that must 

be met if the agreement is to be finalized. 

Buyers may demand that certain repairs or 

improvements be made. Sellers may want 

the right to sell to another bidder after a 

specific date if financing is not final.