Many who sell or buy a house can not know just how big a deal the process is. Sure, we all know that it requires many decisions and can also be time-consuming and frustrating. But if you haven’t been through it before, you may not know there’s a legal aspect to it as well. A legal document or contract will be used every time a property is sold and transferred from one person to another. This document is the real estate purchase contract. But how could you write a purchasing contract for real estate? Luckily, we have our real estate purchase contract templates that can help you get started. Continue scrolling to learn more about this topic below.
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What Is a Real Estate Purchase Contract?
In real estate, the purchasing contract is a contractual arrangement between the purchaser and the dealer that specifies the terms and conditions of the selling transaction. The purchaser will suggest the terms, including the price, which the dealer will either agree to, refuse, or compromise. The dealer should request the purchaser to deposit between 1% and 3% of the selling price that is non-refundable if the purchaser cancels the agreement. The most popular contingency is for the purchaser to obtain financing from a local financial institution. Agreements between the purchaser and the dealer can go back and forth until both parties are satisfied. Once all parties have signed a purchase contract, they are said to be under contract.
How To Understand the Components of a Real Estate Purchase Agreement?
Although certain aspects of the contract are clear, such as the price you pay and when it comes to closing, other parts of the purchasing agreement can be a little complicated, particularly for first-time property buyers. Before you sign it, make sure you thoroughly understand the whole purchasing agreement. Here’s a discussion on how to understand the components of real estate purchase agreements:
1. Financing or Funding
Your purchase contract will provide details about how to pay for the property. If the purchaser does not pay in cash, they will need some form of funding such as a housing or property loan to purchase the property, the details of which must be included in the contract.
2. Money Deposit
The security deposit money signifies that the purchaser is sincere about getting a property. It gives the seller the confidence that the purchaser will never leave them hanging. Sellers don’t want to waste their time, and they want to know that the purchaser will adhere to the deal by closing the contract. If the purchaser wants to back out for an unspecified reason and not written in the agreement, they forfeit their security deposit, and the dealer gets to pocket it. However, the customer will get their security deposit back if it’s due to a cause mentioned in the contract. The security deposit money is usually kept in check by a third party and credited for down payment or closing expenses.
Many types of contingencies must be used or included in real estate contracts. Both parties should agree on these contingencies and crucial to understanding any of these. Contingencies are provisions before the sale can go through. The most common contingencies are financing, inspection, appraisal, and home sale.
4. Closing Price
There are other fees and expenses which will have to be paid at the time of closure. The amount will depend on what was written and agreed in the contract. Closing costs may include such items as agent commission, assessment and inspection fees, tax, security pricing, and insurance.
Who needs and wants a real estate purchase agreement?
Two people need and want a real estate purchase agreement. These two are the seller and the buyer of the property. The seller is the one who wishes to sell the property, while the buyer is the one who wishes to purchase the property.
What to include in a real estate purchase agreement?
The things you need to include in the purchasing agreement are the seller and the purchaser’s details, property details, funding and pricing, closing dates and costs, termination, and payment.
What happened after the purchasing contract is signed?
After the purchasing agreement is signed and the security deposit money deposited, the purchaser shall have the legal right to purchase the property if they met all negotiated conditions.
Although you’re not a legal expert, considering the legal aspects of your property selling or purchase is a good idea. Buying or selling a property is a huge deal, and you can prevent headaches by making sure what you get is a good deal. That’s why legal documents are necessary. If you’re looking for templates that can help you, you can download our real estate purchase contract templates. Download it now!
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