This is a brief summary of real estate contracts. This summary does not cover all aspects of the contract. This video has been made specifically for Real Estate Agents to use as an unofficial educational resource. Nothing in this video is intended to convey legal advice or best practices in any field. This video is only intended to give general advice on broad topics relating to contracts and the closing process at large. For legal advice please contact an attorney and for lending advice please contact a lender.



The answer here should always be “yes” because we are what’s called a “Caveat Emptor” state, which is Latin for “Let the buyer beware.” That puts all the burden on the purchaser and the seller does not have the duty to disclose any information about the condition of the property. In Alabama, for example, the seller does not have to disclose when the roof was last replaced, if there have ever been any foundation issues, if anything in the house has ever been fixed, etc. This is why an inspection is extremely important.

Once you sign an inspection addendum, pay very close attention to the timelines that are put in place. You have a certain number of days to have all these inspections done and a certain number of days before you have to report back to the seller anything that needs to be fixed. If you break a timeline specified in the contract then you’re technically in breach of contract and you may lose the benefits you once had and end up having to buy something you know for a fact isn’t in great shape. 

If you look in section E, you’ll see that the “Purchaser has the obligation to determine any and all conditions of the property material to Purchaser’s decision to buy the property.” It then lists off a whole bunch of conditions, which you should recognize as the items listed earlier that the seller is responsible for determining are there. This is pretty much the seller’s only responsibility: to determine they are there and have not been destroyed since the buyer last saw them. Beyond that, it’s the buyer’s responsibility to make sure they work and are in the condition the buyer wants them to be in. If you purchase a house, get through closing, and then discover that all of these things are broken, you’ve officially purchased the house as is and this is your problem to fix. 

It is good to ask your sellers about flood insurance, though they are not required to tell you whether they have it. Sometimes Realtors will add a note in the Additional Provisions that states the property must not require flood insurance.



This is the inspection you do the day of closing or, if you absolutely have to, the day before closing. If you represent the buyer, this is a way to create a long term relationship built on trust. You are helping your buyer by making sure that everything the seller said was done is actually done and that the property isn’t in a different condition than you last saw it in.

Final inspections are very important even with the most responsible parties. There have been situations where a family moves out of the house a few days early to ensure they’re ready for closing; people find out the house is vacant and break in, throw a party, and cause damage. If this happens and you didn’t verify the condition of the property before signing at closing then this damage becomes the buyer’s problem.

The final inspection is also a great opportunity for you to leave an info sheet for your clients to find when they move in. This is another way to build on your relationship with your client and cement a great review.

Click below to download the documents from this class 


Sample Real Estate Contract (highlighted)

Corresponding Notes

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Section 19-22:


Risk of Loss

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