What to Look for in Purchase and Sale Agreement

I have over 25 years of experience representing private and corporate clients, large and small, in transactions such as mergers and acquisitions, private offerings of securities, commercial loans and commercial activities (supply contracts, manufacturing agreements, joint ventures, intellectual property licenses, etc.). My specialty is complex and new drawing. Also known as a real estate purchase agreement, a real estate purchase agreement is a must for a home sale. In the United States, homes cannot be legally bought and sold without a written agreement signed between all buyers and sellers. If you want the refrigerator, dishwasher, stove, oven, washing machine or other accessories and appliances, do not rely on a verbal agreement with the seller and do not accept anything. The contract must specify all negotiated additions such as appliances and equipment to be included in the purchase. Otherwise, do not be surprised if the kitchen is bare, the chandelier is gone, and the windows are left without a blanket. A very important addition to any real estate contract is the financing contingency clause. This clause protects the buyer in case of unexpected failure of his loan. It allows a buyer to get a refund of the money earned and releases their contractual obligation to buy the house if its financing fails.

Sellers should be aware that if this clause is attached, they will usually not be able to keep the buyer`s serious money if the buyer`s loan fails, and that a loan approval is never a guarantee that the transaction will be concluded. Why it`s important: Contingencies protect you by giving you the option to pull out of the sale if something goes wrong, usually without losing your serious cash deposit, says Kathleen Marks, a real estate agent at United Real Estate in Asheville, North Carolina. But all eventualities have deadlines that must be respected for the transaction to take place. Why it`s important: When choosing a billing date, make sure you take enough time to complete the home inspection, appraisal, and any other eventualities. If you don`t fulfill your obligations under the purchase agreement by the settlement date, you could be considered “in default” and potentially lose your down payment, says Katie Wethman, a Washington, D.C real estate agent. The purchase contract often includes serious financial requirements. Serious money is used to confirm the contract; Prices vary from purchase to purchase, but buyers can generally expect to pay at least $1,000. In most cases, serious money goes into the eventual deposit.

Some sellers may choose to add contingencies that provide for the expiration of serious money if the sale does not materialize due to financing issues. In other situations, the money will be fully refunded to the buyer if the most important conditions are not met. Once completed, certain fees and costs must be paid. The amount each party will pay depends on what was negotiated in the contract. Closing costs may include items such as agent commission, valuation and inspection fees, taxes, lender fees, and insurance. The signed purchase contract can be delivered in person, by e-mail or fax. Digital signatures and those transmitted by fax or photocopy are accepted as valid. A purchase and sale contract sets out the terms of a real estate transaction, but is not set in stone.

Just as buyers and sellers need to understand what`s in the document, they also need to understand what it isn`t. Three things you need to know: Contingencies are conditions that must be met before the sale can take place. Here are some of the most common contingencies you can see in home sale contracts. Most buyers set a portion of the value of the home upon closing and receive the rest of the necessary financing through mortgage financing. Although buyers usually receive a pre-approval letter before making an offer, pre-approval never guarantees the buyer`s ability to obtain financing. Buyers can protect themselves from the possibility of financing failure by including a financing contingency. This possibility stipulates that if the buyer cannot obtain the necessary financing, he can withdraw from the company. Financing contingencies often allow buyers to recoup serious money or deposits when they withdraw from the sale. Buyers and sellers need to know exactly when the purchase contract expires if it is not accepted. This information must be described directly in the contract.

In addition, the party making the offer may withdraw from the sales contract before acceptance of the purchase contract, provided that this is notified. To avoid this scenario, some buyers include an addendum that includes these personal belongings in the purchase price. That is another mistake. What it is: When buyers and sellers sign a purchase agreement, they must accept a form of communication accepted during the transaction, as defined by the terms under “delivery,” Marks says. Nowadays, email is usually an acceptable method of communication, but some people (for example, older buyers or sellers) still prefer snail mail when they receive important documents, such as release from a home inspection. In some states and municipalities, listed properties are eligible for significant tax reductions. Therefore, the intention of homesteading is described in the purchase contract. A property is not eligible for property classification unless it is occupied by its owner or a qualified relative….

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