Understanding Your Purchase Agreement

by Julie Peebles

A purchase agreement is a legal offer to buy a property. In most cases, your realtor will author this for you (purchase agreements can be intimidating with their terms and fine print and it is highly recommended you use a realtor to assist with the legalese). Let’s take a look at the different parts of a purchase agreement you should know about.

WHO?

The first section of the purchase agreement should list the name of the broker and realtor who have listed the home on behalf of the seller as well as the broker and realtor who are representing the buyer. It should also list the name of the buyer(s).

WHAT?

Next is the address of the property being purchased as well as a list of everything that will be included with the sale of the home. Typically fixtures, window treatments, landscaping, garage door openers, storm windows, and any number of other things that usually stay with the home. This will also include the list of major appliances that will be staying as well like washer & dryer, range, refrigerator, etc.

shutterstock_451241965

PRICE

As a buyer, you can offer any dollar amount you want for the purchase of a home. The things you should consider when deciding what to offer are:

  • Competition. Do you have reason to believe there will be a lot of other offers on the home? If so, this could indicate you should offer asking price or close to it so your offer is taken seriously.
  • Time. Has the home been on the market for a while? If a home doesn’t sell quickly, you may be able to offer less than asking price and get a better deal.
  • Value. Some buyers who badly want a specific house may offer over the asking price in order to have their offer accepted.

PAYMENT

Some sellers will ask for an earnest deposit with an accepted offer that is applied towards the down payment at closing. Method of payment for the home is also covered, indicating the type of loan you’ll be using for your purchase and the basic details of your financing.

CLOSING

This is the date you will sign for your loan and buy your home. The buyer and seller often negotiate this date based on several factors such as when the seller is moving out of the home, when the buyer needs to move out of their current home.

Family moving into their new home

POSSESSION

Another item that is negotiated between buyer and seller is when the buyer will get possession of the home following closing. It is common for buyers to gain possession of the home on the day of closing. Don’t be surprised though if it takes a few days to get possession after closing to give the seller time to move. This will all need laid out in the purchase agreement to set up clear expectations for you and the sellers.

Purchase agreements can be changed as many times as necessary to make all involved parties happy prior to the agreement being signed. Once buyer and seller have agreed on each condition and feel the agreement is fair, all parties will sign and the process of owning your home will have officially kicked off. Going into a purchase with a pre-approval is always a smart move; get started today!

Free Home Shopping Guide

YOU MAY ALSO LIKE

Jun 27.2019

What's the Difference Between a Fixed Rate and an Adjustable Rate Mortgage?

Buying a home is overwhelming - plain and simple. There are just so many decisions to make. When is a good time to buy? What neighborhoods are on the ...

Jun 13.2019

How Much House Can I Afford?

When you begin looking for a home, you will be met with dozens of opinions. Everyone has a different idea of where, when, and how you should purchase a ...

Jun 6.2019

Rate/Term Refinance versus Cash-out Refinance

Two basic home refinance options exist in today’s marketplace: Rate/Term and Cash-out. Of course, within each of those options a bevy of sub-options ...

Subscribe to Receive Our Weekly Blog Updates!