Remember the old saying, “get it in writing?” Well, that’s especially important when it comes to real estate, because you are required to get a written agreement when it comes to purchasing a home.
When you express interest in a certain property, and are ready to sign the paperwork, the real estate agent will present you with a “Residential Purchase Agreement.”
The form will contain a series of important pieces of information, such as the sales price, a target date for closing, earnest money (which is the cash deposit you agree to make out of good faith), provisions, contingencies, and much more. Once it’s submitted and accepted, it will serve as a binding sales contract, though it will also include a time limit after which it will expire.
It’s very important to ensure that all areas of concern are covered, in case anything unexpected comes up. By adding contingencies, you can protect yourself if you’re unable to find financing or if the home inspection isn’t satisfactory. By adding these clauses, you are making the offer contingent upon certain events, as opposed to accepting an offer straight up. Keep in mind that the seller will be more willing to work with a buyer who requires fewer contingencies, assuming the offers are similar in price.
That said, if you can finance the home with cash, or you’ve already been pre-approved for a mortgage, you’ll be a more attractive buyer. Conversely, if you need to sell your existing property or obtain special financing before the deal can go through, the seller may look beyond your offer, even if it’s higher than others.
It’s quite common for offers to be negotiated back and forth between buyer and seller, via counteroffers. For example, the sales price or proposed closing date may need to be adjusted until both parties agree on the terms. Similarly, who pays for what will also need to be addressed, such as termite inspection, survey, repairs, etc. Will there be seller paid closing costs or will it come out of your own pocket? All these items must be negotiated, and who has the power will be determined by supply and demand, and interest in the subject property.
The purchase contract will also contain important details regarding the legal description of the property and the type of deed given. Be sure to take your time to review all the details of your purchase contract before signing or accepting it. If there’s anything you’re unclear on, it’s best to ask the real estate agent instead of throwing caution to the wind. Purchasing a home is a huge decision and one that should not be rushed or taken lightly. Check out common home buying mistakes people make.