What Is a Real Estate Purchase Agreement?
Buying or selling a home is a major milestone to meet and be proud of, but the process can feel overwhelming if you’re unsure how to navigate through the legal components, such as signing a real estate purchase agreement. Also known as a real estate sales or purchase contract and a home or house purchase agreement, the real estate purchase agreement is a contract that is signed when home property is transferred from one person to another.
What Makes a Real Estate Purchase Agreement?
Every buying or selling contract is different. However, since the purpose of a real estate purchase agreement is to outline the details of a home transaction, the following are typically outlined:
- Information about the buyer and seller
- Details on the property, including fixtures or appliances in the sale
- Specifics on pricing, closing cost responsibility, and borrower financing
What To Know Before Signing a Real Estate Purchase Agreement
While the above outlines are relatively clear, other components of the agreement may seem more complicated, especially for first-time buyers or sellers. Before you sign the contract, know the following:
- Contingencies: The following conditions must be met before a sale is made.
- Financing contingencies: Tells the seller how the buyer will obtain financing and protects the buyer if they can’t secure a mortgage
- Inspection contingency: Calls for a professional inspector to assess the home and lets the buyer leave without penalty if they aren’t satisfied with assessment
- Appraisal contingency: Explains that the home needs to appraise at or higher than the sales price
- Home sale contingency: Included when this new home purchase will only be possible when the buyer sells their current home
- Earnest money deposit: Also known as a good faith or escrow deposit, earnest money deposits let sellers know that buyers are serious about purchasing a home. Since it’s typically held in escrow and credited toward the down payment or closing costs, the deposit can also protect the seller if the buyer backs out.
- Closing costs: These are fees that are paid at the end of the buying process, which can include agent commission, appraisal and inspection fees, taxes, lenders fees and insurance.
Lastly, the buyer will propose an offer price within the contract, which can be negotiated between the buyer and seller. Once both parties agree and sign off on the contents of the contract, they will be considered “under contract.”
Butler Mortgage Will Support You in the Process
If you need help understanding real estate purchase agreements, our experts are here to support you. At Butler Mortgage, our mortgage professionals can match you with affordable home financing loans at desirable rates so you can complete the Central Florida home buying process. Let us help you find the right loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.