A real estate purchase agreement is needed whenever anyone buys or sells a home. It’s a binding contract between the buyer and seller that details the different parts of the sale transaction including the price and any contingencies.
The buyer’s real estate agent or the buyer themselves usually provides the purchase agreement. But what exactly does it entail? Let’s take a look at the specifics.
What Is A Real Estate Purchase Agreement?
A real estate purchase agreement is a contract between the buyer of the house and the person who is selling it. It usually includes the price of the home as well as anything else the buyer and seller have agreed on.
A drafted real estate purchase agreement doesn’t mean that the buyer or seller has to immediately agree on anything simply because it’s in the agreement. Either party can still negotiate and reject any of the details until they get what they want or they compromise.
Once both parties agree and approve the terms in the agreement, all that is needed is a signature from the buyer and the seller. Once that occurs, they are both under contract.
Who Prepares A Real Estate Purchase Agreement?
A couple of different people can prepare a real estate purchase agreement. Usually, the buyer’s agent writes up the purchase agreement. But if the owner of the house is selling on their own, they may prepare the agreement.
Whatever the situation, it’s best to have a lawyer involved or to use a standardized form for this type of contract so you know everything is correct. Real estate agents are not lawyers and can’t create legal documents but they will likely have standardized contracts you can use.
What’s Included In A Real Estate Purchase Agreement?
While every real estate purchase agreement will likely look a little different, there are a few basic things that are typically included. Most agreements include:
- Buyer and seller information
- Property details
- Pricing and financing: the price and how it will be paid
- Fixtures and appliances included/excluded in the sale
- Closing and possession dates
- Earnest money deposit amount: the deposit placed on the house (in escrow) to show the buyer the seller is serious
- Disclosures: whether the seller has received certain information from the seller
- Prorations: who will pay property taxes, homeowner association fees, and other annual fees once the home changes hands
- Insurance requirements
- Closing costs and who is responsible for paying: the closing cost usually is about 3 – 6% of a home’s purchase/sale price.
- Conditions under which the contract can be terminated
- Contingencies or conditions that must be met for the sale to go through
What Are The Contingencies Of A Real Estate Purchase Agreement?
There are quite a few contingencies that can be included in a real estate purchase agreement on both the buyer’s and the seller’s sides. Contingencies are simply conditions that must be met in order for the sale to go through. If the contingencies aren’t met, the sale is off.
Some of the contingencies you may add to a real estate purchase agreement include:
- Financing contingency: The sale is contingent on the buyer receiving financing/a mortgage, unless they are paying in cash.
- Inspection contingency: The buyer is able to back out of the sale if they aren’t satisfied with an inspector’s report on the home.
- Appraisal contingency: The home must appraise at a value equal to or higher than what the buyer has agreed to pay.
- Home sale contingency: The purchase is contingent on if the buyer is able to sell their current house
- Title contingency: A title report is received and there are no liens or other problems with the property title.
Your real estate purchase agreement is a critical document in the homebuying process — and an experienced real estate firm like BlueWest Properties can help you get it right! Our friendly, knowledgeable agents truly have your best interest at heart, and are happy to help you purchase your dream home. To start working with us, give us a call or contact us online. Or for more tips on homebuying, check out our blog 10 Tips for the First-Time Homebuyer.