Get Your Dream Home With a Real Estate Purchase Agreement
Have you been daydreaming about your new abode? Did you finally find a house you would like to call home? All that’s left is to make a real estate purchase agreement. Unless you are a lawyer or someone with substantial knowledge of the law, this may sound like trouble.
What Is a Real Estate Purchase Agreement?
A real estate purchase agreement is a legally binding contract between a buyer and a seller that outlines the details of the transaction. The buyer suggests the conditions of the contract, including the price, and the seller can agree or not. Once both parties sign the purchase agreement, it becomes legally binding.
You can use real estate purchase agreements for virtually any type of residential property purchase, as long as the property has been previously owned, or the construction of that property will be finished before the contact’s closing date. This agreement can also go by the name of:
- Real Estate Sales Contract
- Home Sale Contract
- Real Estate Purchase Contract
- Agreement to Purchase Real Estate
Every real estate purchase agreement is unique, but basic details that should always be included are:
- Buyer and seller information
- Pricing and financing
- Property details
- The earnest money deposit amount
- Fixtures and appliances included or excluded from the sale
- Closing and possession dates
- Termination conditions
- Closing costs and the party responsible for paying them
- Contingencies or conditions that have to be met for a successful sale
Parts of the Real Estate Purchase Agreement
While most terms mentioned above are straightforward, some may seem puzzling if you are not a legal expert. Let’s get to know the ins and outs of a real estate purchase agreement.
Earnest Money Deposit
Earnest money deposit is the amount of money a buyer gives to a seller to show good faith and an honest intention to purchase the house. This money is usually held in escrow, a third party in charge of holding the funds until everything is finalized. The buyer can lose this money if he/she breaks the agreement. If there is a reason allowing the buyer to break the agreement, he/she gets the money back.
The easiest way to pay for your new home is in cash. If this is not an option, there are different ways to get your dream house:
- A bank loan—Obtaining a mortgage to purchase the property
- Seller financing—The seller lends the money to the buyer, and the buyer pays back the loan over time, with interest
- Assumption of mortgage—The buyer takes over the seller’s existing mortgage on the property
Contingencies are conditions that must be met for the purchase to occur. There are several types of contingencies:
- Inspection contingency—This contingency allows the buyer to inspect the property before the closing of the deal
- Financing contingency—It allows the buyer to back down from the contract and get the earnest money back if he/she cannot get a loan to buy the house
- Appraisal contingency—A licensed appraiser gives an appraisal of the house, and a buyer can break the contract if the price of the house is estimated to be lower than the one stipulated in the contract
- Sale of home contingency—If the home is not sold by a date specified in the contract, the buyer can withdraw from the contract
Certain fees and costs are due at the closing of the deal. The amount of money is negotiated in the contract. These fees include:
- Agent commission
- Appraisal fees
- Inspection fees
- Lender fees
Typically, buyers pay from 3%–6% of the purchase price, and the sellers a bit more.
How Does the Process of Purchasing a House Look Like?
If you are curious about the process of purchasing a house, we have summarized the steps for you in the table below.
|Listing||Searches for a property||Lists the house for sale|
|Offer to buy||Makes an offer||Accepts the offer or bargains for a new one|
|Final Agreement||Agrees with the seller to finalize the agreement||Agrees with the buyer to finalize the agreement|
|Escrow||Deposits earnest money||Makes the changes agreed upon|
|Loan||Starts loan process||The seller may agree to fund|
|Closing the deal||Pays the remaining balance||Moves out of the home|
|Delivery||Gets the keys and moves into the house||Escrow pays the seller|
Can I Cancel a Real Estate Purchase Agreement?
The only way to cancel a real estate purchase contract after signing it is to make a deal with the seller if you want to avoid the courtroom. Before you sign the agreement, you can easily give up on buying a house.
Once you put your signature on it, the real estate agreement is legally binding. You can get penalties if you opt out for any reason not clearly stated in the contract. The termination conditions must be defined in the document.
Use DoNotPay To Create Legal Documents
The buyer’s agent drafts the real estate purchase agreement if he/she has a license. You can hire a lawyer to draft a legal document, which can be quite expensive. Luckily, there is an easier option. Use DoNotPay to generate various legal documents in the blink of an eye. Here is how it works:
- Open DoNotPay in any web browser
- Enter the name of the document you need
- Answer a few questions from our chatbot
- DoNotPay creates a document for you
This document is not official until you sign or notarize it.
DoNotPay is working diligently to create more legal documents as we speak. At the moment, we can generate the following:
|Business and Real Estate Documents||Other Documents|
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