In 2018, around 5.34 million homeowners sold their houses. Every time a person sells a home, there is a buyer who makes an offer.
A real estate offer comes in the form of a real estate purchase agreement. If you are buying or selling a house, you’ll need to understand what this is.
If you have questions about it, you can continue reading this guide to learn the top FAQs about real estate purchase agreements.
What Is a Real Estate Purchase Agreement?
A real estate purchase agreement is a contract used for home sales. When people buy houses, they write purchase agreements to give to the home sellers.
A home seller receives the agreement and must review it. The home seller doesn’t have to accept the agreement if they aren’t satisfied with it.
If they don’t agree to it, they can reject the offer or write a counteroffer. If the seller likes the agreement and is satisfied with it, they can accept it.
A real estate purchase agreement doesn’t guarantee the sale of a property. Instead, it’s the contract that initiates the negotiations for a real estate deal.
When Do People Write Them?
During the home buying process, a person will look for the right house to buy. This person might view one or two homes or dozens before finding the right one.
For the person to write a purchase agreement, they must be certain that they want to buy the house. The house must be the right price and size. It must be in the right location and offer the amenities they need.
When the buyer finds the right property, they will write the real estate purchase agreement. There is no deal until the seller receives the agreement from the buyer.
Therefore, a person only writes a purchase agreement when they’re certain about buying a particular home.
Who Writes the Agreement?
The next thing you might wonder about is who writes the agreement. A typical home buyer might not know how to write a purchase agreement. Therefore, the buyer isn’t the person who writes it.
Instead, the buyer’s real estate agent writes the agreement. Real estate agents have the proper training and experience to know how to write purchase agreements.
Your agent will write the agreement for you, but they might ask you some questions. For example, you’ll need to decide what to include in the offer and the offer details.
Your agent will provide tips and recommendations to help you create a purchase agreement that protects you. Let Giles & Robinson, P.A. help you with various areas of law such as estate planning and wealth preservation.
What Information Should You Find in a Purchase Agreement?
A real estate purchase agreement needs the proper elements, and that’s why you need a real estate agent to write it. You can narrow down the things to include by examining the following categories:
The first category of information to include is the general information about both parties. It should include your name and the seller’s name. It should also include details about the property you want to purchase.
Offer Price and Other Expenses
Next, your purchase agreement should clearly state the amount you want to offer the seller for the home. Additionally, if you want to ask the seller to pay for some of your costs, you must also include these details on it.
A purchase agreement also contains contingencies, which are conditions for the sale. You might include a financing contingency, which states that the deal is good as long as you can get a loan.
You can include many other contingencies, and you should talk to your real estate agent to learn more about your options.
It’s also a good idea to include your intentions relating to the closing date and date of possession. Including these details is important to the home seller.
Finally, your agreement should state how much money you are offering as the earnest money. Offering earnest money shows that you’re serious about buying the house, and the money sits in an escrow account until closing.
It might take one month or longer to reach the home closing date, as it takes time to work through the details of the loan. Both parties must complete all the things they agreed to before you can close.
When Does the Agreement Become Binding?
Real estate contracts do not become binding agreements until both parties sign them. In fact, after the buyer creates it, they’ll send it to the seller.
The agreement is not binding until the seller signs the agreement and gives it back to the seller. At this point, the real estate agent can label the home “under contract.”
The deal is still not through, though. The buyer doesn’t take possession of the home until closing. Until this date, the home belongs to the seller.
Can Someone Cancel a Purchase Agreement?
Finally, you might wonder if someone can cancel a purchase agreement. While the agreement becomes binding after both parties sign it, either party can cancel the agreement.
If the seller decides not to sell, they might cancel the agreement. The buyer might be able to sue the seller if this happens, unless the seller has a legal reason to back out of the deal.
The buyer can also cancel the deal. If the buyer gets scared or finds a better house to buy, the buyer can void the deal.
However, if the buyer doesn’t have a legally valid reason for canceling it, the buyer will lose the earnest money. If the buyer has a legally valid reason for canceling it, they will receive their earnest money back.
A Purchase Agreement Is Vital for a Real Estate Sale
Whether you want to buy or sell a house, you’ll need to understand what a real estate purchase agreement is. After reading this guide, you should have a great understanding of what it is and why it’s vital for home sales.
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