The Contract to Buy and Sell (CBS) is the cornerstone of most real estate transactions in Colorado. It’s the agreement that outlines the terms between the buyer and seller, and once both parties are in agreement and sign the contract, the home is officially “under contract”. This contract includes important details like property information, key deadlines, financing terms, and conditions of the sale. Below, we highlight some of the most important components of this essential contract.
Contract to Buy and Sell Real Estate
When a buyer finds a property they are ready to make an offer on, their RealtorⓇ will prepare a CBS based on their desired terms. Once the buyer signs, it is then shared with the listing broker to present to the sellers. If the sellers also agree with the terms, they will sign as well, or they may elect to submit a counterproposal to the offer. Some properties may receive multiple offers, which the sellers will need to evaluate before deciding how to proceed. It is important to discuss strategy with your RealtorⓇ, as some situations may call for your best offer up front, while others may allow for negotiations. Once this contract is signed by both parties, it becomes legally binding until closing, amendment, or termination.
Counter Offers
If a buyer submits an offer and the seller wants to negotiate, they can send a counterproposal with changes. When the buyers receive it, they can agree and sign, or resubmit another offer that incorporates any agreeable terms from the seller along with their own adjusted terms. This back-and-forth process can lead to an agreement or, in some cases, the parties may not find common ground and the contract does not come together.
Price
Purchase price is one of the most basic components of the contract. It is further broken down to the method of payment including earnest money, loan amount, mortgage assumption, private financing, seller financing, and cash at closing. There are many different types of loans, down payment structures, and seller concessions that impact how attractive an offer appears, especially in a competitive market. Buyers should have a clear understanding of all of the financial implications before submitting an offer, and the seller should understand all of the related fees so they can consider their total proceeds received at closing.
Inclusions & Exclusions
It is essential that both parties understand what is and is not included in the sale. This section of the contract clearly outlines included and excluded items. Attached inclusions usually cover lighting, built-in appliances, vanity mirrors, window coverings (although curtain and curtain rods are sometimes excluded) and other central home systems. Non-attached but included items often cover things such as awnings, curtains, sheds, washing machines/dryers, garage storage, just to name a few. Additional items like solar panels, security systems, satellite dishes, water softeners, parking/storage spaces, and water right/well rights should also be specifically written into the CBS. Any personal property not attached to the home - such as furniture, lawn mowers, snow blowers, and other tools that make the property run, requires a separate Bill of Sale and must be referenced in the contract.
Dates & Deadlines
The CBS outlines a series of important dates and deadlines that each party is independently responsible for meeting. These include deadlines for title review, association documents, seller’s disclosures, loan deadlines, inspections, appraisals, surveys, due diligence, closing date and possession time. Not all of these may be applicable and some may be waived. Meeting the deadlines is crucial to ensuring everything moves forward smoothly and that the buyer retains the right to terminate and recover their earnest money should the contract terminate.
Good Faith
One of the most important foundations of the CBS is the Good Faith clause, which requires that the buyer and seller act in good faith as they move through the sale process. This means each party agrees to be honest, reasonable, and fair in carrying out the terms of the contract. It applies to key sections like financing, title review, surveys, inspection and disclosures. Acting in good faith helps ensure that both sides are working toward a successful closing rather than using the contract's contingencies as loopholes to cancel unfairly or stall the process. It sets the stage for trust and keeps the transaction moving forward with transparency and integrity.
Broker Compensation
While the seller’s agent’s compensation is handled within the listing contract, the buyer’s agent compensation is included in the CBS. The contract must specify the amount or percentage of the compensation, and who is responsible for payment. Compensation is negotiable, including amount and paying party. In La Plata County, it is most common for sellers to cover the buyer’s agent’s compensation.
Amendments & Termination
If changes to the contract are needed - such as extending dates or other terms - the parties can execute an amendment if both are in agreement. Although the goal is always to close smoothly and successfully, Colorado real estate contracts are generally buyer-friendly, allowing for termination rights when property is written and applied with good faith. Inspection, appraisal, and insurance clauses give the buyer an opportunity to fully evaluate the property and lending options before proceeding.
There are many nuances and terms with the contract to buy and sell. Having a trusted RealtorⓇ to guide you through the process helps minimize stress and increases the likelihood of a successful transaction. Please don’t hesitate to reach out to Max Hutcheson and Deven Meininger for real estate guidance.
See a sample of this contract here.
