A purchase agreement contains terms, prices and requirements for the sale of real estates, such as the dream home you wish to buy.
The purchase agreement may leave you feeling a bit overwhelmed, especially as a first-time buyer. Here are eight elements you should expect to see in this contract.
1. Parties to the transaction
The purchase agreement will provide the legal address of the property and contact information for each party involved. The parties must be of legal age and mentally competent.
2. Offered price and terms
This component states the offered price and an explanation of how the buyer will pay. Earnest money is also included here, cash the buyer provides to solidify the agreement.
3. Closing details
The contract states the closing date and closing costs. Here is where you will also find the real estate agent’s commission information.
4. List of included or excluded items
A purchase agreement will often list the items to be included or excluded from the sale of the property. Kitchen appliances, light fixtures and window treatments are examples of such items.
The seller cannot avoid informing the buyer of known defects in the property. This is illegal, since failing to disclose such information could put the buyer at risk.
The agreement can contain various types of contingencies. For example, this section might state that the buyers must sell their home before purchasing the new home.
7. Expiration of offer
The agreement should state when the offer should expire if the seller does not accept it. Once the seller accepts and so informs the buyer, the contract is legally binding.
Finally, if either the buyer or seller should fail to fulfill any part of the contract, they may be in default. The party not in default may bring suit against the other party for reneging on the agreement.