Understand the Key Parts of a Real Estate Purchasing Contract

A real estate purchase contract, also known as a “contract to purchase real estate” or a “residential purchase agreement,” is a binding, bilateral agreement between two or more parties. The purchase contract is the key to your real estate transaction. Not only does it make your purchase or sale official, but it also protects both the buyer and the seller, ensuring that all expectations are clear.

Purchase agreements can vary from one state to the next but generally contain the same key elements. In some regions, agreements are concise and serve primarily to open the negotiation process, while in other regions, the purchase agreement may be an in-depth, legally binding contract.

real estate contract

The U.S. Statute of Frauds requires that all real estate contracts must be in writing or they’re not enforceable, and must be signed by both the buyer and the seller. (Handshakes are a thing of the past!) An experienced real estate lawyer or agent will be able to help you put this together, but a real estate purchase contract should also include the following:

 

  • Identification of the parties

 

And a description of their role

 

  • A description of the property

 

Including the address, condition, and legal description

 

  • Price accepted by the seller

 

And means by which it will be paid

 

  • Deposit amount

 

And means by which it will be paid

 

  • Closing dates and costs

 

And who is responsible for costs

 

  • Itemized additional costs and who is responsible for paying

 

Including inspections, appraisals, etc.

 

  • Contingencies that must be met before the sale can go through

 

Might include problems with the inspection, appraisal, financing or title

 

  • Fixtures and appliances that are included

 

And what moves with the seller

 

  • Required disclosures

 

Like termite damage, lead paint, etc.

 

  • Delivery, acceptance and expiration dates

 

Exactly when the purchase agreement will expire if not accepted

 

  • Default

 

Terms by which either party can back out of the agreement

 

  • The signatures of each party

 

Acceptance of the terms must be communicated. At this point, the offer becomes a legally binding contract

 

Having competent lawyers and agents in your corner who can draft a solid legal contract can help to prevent a good deal from going bad, but it’s still important to understand the elements of your real estate purchase and sale agreement. As with any legal document, it’s essential to review a contract thoroughly. If anything is unclear, ask your AdvantageU certified agent and attorney. And even if you don’t see any red flags, ask questions anyway. You want to be especially careful when considering contingencies, disclosing information about the property, and deciding on deadlines.

Team Wickham

1580 Valley River Dr. ( Suite 130 )

Eugene, OR 97401

Phone: 541-954-7838