A real estate purchase agreement is a crucial document in a property transaction, signed by both the buyer and seller. This agreement, finalized after negotiations, serves to protect both parties throughout the transaction. Given the significant financial implications of real estate purchases, having a purchase agreement is essential.
What is a Real Estate Purchase Agreement?
A real estate purchase agreement outlines the terms agreed upon by the buyer and seller for a real estate transaction. Once completed and signed, this agreement binds both parties until the sale is finalized, which typically takes one to two months.
As a legally binding document, the purchase agreement details all important aspects of the transaction, including:
- Closing Date: The date when the transaction is expected to be completed. An addendum can be added if adjustments are needed.
- Purchase Price: The amount the buyer agrees to pay for the property.
- Earnest Deposit: The amount of deposit money provided by the buyer to show commitment.
- Contract Breach Consequences: Terms outlining what happens if either party fails to adhere to the agreement.
- Seller Concessions: Any concessions or incentives offered by the seller.
- Contingencies: Conditions such as inspection results or financing requirements that must be met for the sale to proceed.
When a buyer makes an offer on a property, they will include their proposed conditions in the purchase agreement, covering financial details and other terms. This agreement can be drafted with the assistance of a real estate agent or by using a standard template.
The seller reviews the proposed contract and may make a counter-offer, possibly adjusting the price or changing the closing date. After negotiations are completed, both parties finalize the agreement by signing the purchase agreement.
Once under contract, both the buyer and seller are obligated to adhere to the terms until closing. At the closing, the transaction is completed: the funds are transferred to the seller, the buyer takes possession of the property, and the contract is fulfilled.
