A real estate purchase agreement is a legally binding contract governing the purchase and transfer of real estate. It is an agreement that specifies the conditions for a sale and the parameters of the transaction between a buyer and a seller.
If you are attempting to sell a primary residence or investment property, or if you are planning to purchase a new house, apartment, or condominium, you must ensure that your contract is solid and understand what is a purchase agreement.
What is a “Agreement to Purchase” exactly?
A real estate purchase agreement is a document that details the terms upon which a buyer and a seller have mutually agreed to proceed with a real estate transaction. When both a buyer and a vendor sign a purchase agreement, they are legally considered to be “under contract” with one another and the subject property.
Constituents of a Residential Property Purchase Contract
The real estate sales contract and purchase agreement is a protracted document that details the property transaction in great detail. Before finalizing the transaction, both of these documents should be thoroughly reviewed.
On its pages, you will find several typical components, including the following:
Information for purchasers as well as sellers: Detailed identifying information, including names and contact information, for each customer and seller involved in the transaction.
- Include the property’s address, a comprehensive description of the property, and any other pertinent information pertaining to it.
- Purchase price refers to the agreed-upon total selling price for the property, which may or may not include deposits and other transaction-related fees.
- Warranty statements and representations are factual assertions made by the vendor regarding the condition, content, and structure of the property for sale (the seller may disclose these particulars in a warranty deed, if desired).
- Financing refers to the intricacies of the buyer’s plan to pay for the property, which may include obtaining a mortgage loan from a lending institution, assuming the seller’s existing mortgage, or a combination of the two.
- Fixtures and appliances refer to all wall-mounted products, wall-mounted appliances, and home appliances that will be included or excluded from the sale of the real estate.
- Title insurance is a notation that specifies whether the buyer or vendor is responsible for purchasing title insurance to protect against potential flaws in the property. This is done to safeguard against potential financial loss in the event that these issues are discovered.
- Before the transaction can be consummated, references to any property taxes that will be assessed on the property being purchased are required.
- The precise date and time that the buyer will receive the home’s keys, as well as the date and time of the official transfer of title, are both referred to as the closing date and are specified in your purchase agreement.
- The term “contingencies” refers to any conditions (such as repairs that must be completed by a certain date or inspections that must be conducted) that must be fulfilled before a property sale can be finalized.
Earnest money terms refer to the terms of any earnest money security deposits that are required to demonstrate to the vendor in good faith that the buyer is interested in purchasing the property.
