Understanding Real Estate Purchase Agreements
Buying and selling a home is a major and sometimes intimidating process, especially when real estate purchase agreements become involved. A real estate attorney can review legal documents needed to buy or sell a home to make the process as smooth and stress-free as possible.
Before signing a real estate purchase agreement, it is important to understand what it is and what it entails. At McKinley, Conger, Jolley & Galarneau, LLP, our attorneys are familiar with real estate purchase agreements for homes in the Stockton, CA and Central Valley, CA, areas. We can help you with your purchase agreement.
What Is a Real Estate Purchase Agreement?
A real estate purchase agreement is a legally binding contract that is required to buy or sell a home. Real estate purchase agreements stipulate the terms agreed upon by both the seller and buyer. These terms typically include the purchase price of the home, the closing date, and the date the buyer will take possession of the home.
Real estate purchase agreements vary by state and by the individuals involved in the real estate sale. With that said, let’s take a closer look at some things commonly included in real estate purchase agreements.
The closing date, also called the settlement date, refers to the agreed-upon date when buyers and sellers meet to finalize the home sale.
When determining the closing date, it’s important to choose a date that will allow enough time to complete steps that must be done when buying or selling a home, like getting the home appraised and inspected, and giving lenders enough time to complete the loan process.
Another date that is generally included in a real estate purchase agreement is the possession date. This is the date the buyer will be allowed to take possession, or move into, the home.
The possession date may be the same as the closing date or it may be several weeks later, depending on what the buyer and seller decide.
Many buyers want to take possession of their new home as soon as possible, but offering to wait longer before possession can make the buyer’s offer more appealing to sellers, especially in Stockton and Central Valley where the real estate market can be competitive.
Earnest Money Deposit
An earnest money deposit is typically required to show a buyer is serious about the purchase of a home. The amount of the deposit will vary based on what the buyer and seller agree upon but is commonly between 1 to 2 percent. Whatever amount is agreed to is then listed in the purchase agreement.
This money is then held by a title company or real estate broker to later go toward the buyer’s closing costs or down payment.
An earnest money deposit may be forfeited if the buyer backs out of the sale for a reason not outlined in the purchase agreement as a contingency.
Contingencies are often included in real estate purchase agreements to outline things that must be done to complete the sale. If contingencies aren’t fulfilled, the sale may not go through.
Contingencies may allow the buyer to back out of a sale without losing his or her earnest money deposit, provided that a contingency wasn’t met. For example, an inspection contingency may allow buyers to request repairs, to be fixed by the seller, after a home inspection. If the seller is unwilling to fix repairs, the buyer may be able to walk away from the sale.
Contact the Real Estate Attorneys of McKinley, Conger, Jolley & Galarneau, LLP
Real estate purchase agreements are necessary for both the buyer and seller’s interests, but they can be complicated for both parties. If you are considering buying or selling a home and would like to speak with a real estate attorney before signing a purchase agreement, our team can help. Please call 209-477-8171 to schedule a consultation at your earliest convenience.