Finding the perfect home can be a lot like finding the perfect mate. For some, it is love at first sight, while for others the process takes time and goes through a number of possibilities. After finding that perfect home, buyers can start the home buying process, which begins with the real estate purchase and sale agreement. The purchase and sale agreement is an agreement between the buyer and seller that specifies all of the details of the property sale.
After a buyer finds a house he wants to purchase, the next step is submitting a purchase and sale agreement to the seller of that property. The seller reviews the purchase and sale agreement and if she agrees with all the provisions laid out in the agreement, she signs it and the buyer and seller officially begin the purchase process. If after reviewing the agreement, the seller finds some provisions she does not find acceptable, she will make a counter-offer stating her terms or decline the offer outright. The buyer then must decide if he is willing to accept the seller's counter or he may make another counter to the terms. This process goes back and forth until both parties agree on all the terms.
The real estate purchase and sale agreement assures both parties that all the conditions will be met before the buyer pays the seller for the home and the seller turns over the title to the property. The purchase agreement lays out the terms of the earnest money, including how much the buyer will give and who will hold the earnest money. The earnest money protects the seller from losing the sale because it provides an incentive for the buyer to fulfill his obligations to the sale or risk losing the earnest money. The sale agreement also protects the buyer by stipulating any conditions the seller must meet before the buyer purchases, such as maintaining the home's condition and making any necessary repairs.
While the exact wording and order of conditions differs from agreement to agreement, all real estate purchase and sale agreements have similar details. These details include the buyer's and seller's full names, address of the property, purchase price, earnest or deposit money terms, date of closing and inspection requirements. Other details include how the buyer will be financing the purchase, any seller contributions to closing costs and any inspection contingencies, which allow the buyer to back out of the contract if the inspection reveals issues the seller refuses to fix.
A real estate purchase and sale agreement can include additional documents as well. If during the negotiation process the buyer or seller want to add an entirely new and unrelated stipulation to the contract, he would submit an addendum, which becomes part of the sale agreement. Both parties must agree on and sign off on any addendum, and once signed, it becomes legally binding. Other documents typically included with a real estate purchase and sales agreement include the Seller's Real Estate Disclosure Form, which discloses any known issues with the home, and a Lead Paint Disclosure Form, which certifies whether the home has any known lead-based paint hazards.
- Stockbyte/Stockbyte/Getty Images
- How to File a Land Contract
- What Does Under Contract Mean in Real Estate?
- The Seller Will Not Give Back the Deposit With a Cancelled Contract on a Home Purchase
- Can You Still Negotiate After an Appraisal?
- How to Type Up a Sales Contract for Selling a House
- Can a Home Sale Binding Contract Be Broken?