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Real estate contracts are binding legal documents.Every agreement in a real estate contract must be written into the contract or else that agreement is invalid. There is a reason for this. All parties involved with the real estate contract need to understand clearly each phase of their real estate transaction. When you enter into a real estate purchase and sale agreement with another party it is imperative that you understand the various steps needed to be taken for that contract to be fulfilled.

Most people assume that the important phase of a purchase and sale agreement is to agree on a price for the property and a closing date of the pending purchase. While setting the purchase price and the closing date of the transaction set the contract in motion. The most critical element of the purchase and sale agreement is how it is crafted to protect each party during the different phases of the contract.

For example, the first page of a purchase and sale agreement requires a decision about Default of the Contract. The two choices of default are usually a Forfeiture of the Earnest Money or Seller's Election of Remedies. The best choice for a buyer is the Forfeiture of the Earnest Money, because that is a default remedy, which limits the buyers loss to the amount of the earnest money.

If you don't choose the Forfeiture of Earnest Money deposit, the amount the Seller may decide they need to Remedy the Default could be far greater than the Earnest Money Deposit. This is just one reason why it is important to insure that your purchase offer is well crafted to avoid financial pitfalls.

The consequences of breaking a real estate contract can be:

1. Losing a property that you really want.
2. Losing your earnest money deposit.
3. Losing a working relationship with your Realtor.
4. Losing the confidence of other service providers, such as mortgage brokers
and escrow companies.
5. Causing yourself a great deal of grief and the loss of time.
6. Possible legal fees.

The consequences of breaking a real estate contract grows greater during each phase of the real estate contract. The inspection period is the first addendum period, or phase of a contract to work through after the parties have mutually agreed to the terms of the contract. This can be thought of as a discovery phase where the buyer has a set amount of days (usually seven days) to inspect the property and insure that they want to continue with the purchase of the property.

After this period

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