The purchase contract is arguably the most important piece of information when buying a home. In it, is where you’ll find things like the price, deadlines, and any contingencies that must be met before the sale is final.
Given how important it is that buyers familiarize themselves with it, we’ve decided to take a closer look at the purchase contract by outlining everything there is to know about one.
What Is It?
The purchase contract is essentially just that: a contractual agreement between the buyer and the seller. Since everything written in the agreement is legally binding, it’s important for both parties to review all its details.
Otherwise, missing something after signing can leave you with some serious remorse if you’re left on the hook for funds or an unfavorable outcome. For example, if the buyer doesn’t follow through on the contingencies, then the deposit could still go to the seller. So, be sure to speak over the details with a professional before agreeing to anything.
Included Details
In it, both parties will be able to find the closing date, price, and location. For the price, there will also be details about how the purchase is being financed, and the amount of earnest money that is being paid by the buyer. Further, the document will outline where the money will be held during the closing
The agreement will also contain a set of disclosures. Disclosures are things that the seller wishes to tell the buyer about the home. Typically, it is about any flaws or potential issues at the property (like water damage). Or, it can be things that could end up legal matters like if there is a lien or judgment against the property.
In addition to these facts, there will also be contingencies. A contingency is something that needs to occur before the sale of the home is final. A common example of this is when the sale of a property is contingent on the sale of a current home. Another example is that the sale can be contingent on a clean home inspection.
But, it is also important to note that the base of this contract varies depending on the state it is being written in.
Who Does It?
Although both parties (buyer and seller) will be involved in the purchase contract, the paperwork and terms will be written by the agents. Both the buyer and seller agent need to negotiate and agree on these terms before signing. And only once both parties agreed, it will then be passed on to each side’s real-estate lawyer (if needed).
Contingencies to Be Aware Of
In a purchase contract, the contingencies are the things that could really sour a deal. So, it’s important to be aware of what they are and what needs to be done for it to be considered ‘fulfilled.’ One of the most common contingencies is for the buyer to have to sell their current home before purchasing again.
Another example of a contingency is the home appraisal. In this case, if a low home appraisal is received, the deal will likely be null. That’s because the buyer’s lender will likely need to take back the loan and readjust the amount (since they could be giving more money than the house is worth.)
Additionally, home inspections are another common contingency that both parties should be aware of. On the agreement, buyers should try to specify what issues (if found in the home) will be deemed acceptable. Otherwise, not having a clear outline of what is acceptable can leave some responsible to make the fixes on their own.
Breaking A Contract
If you’re having second thoughts about the sale, you might still have a chance to reverse it. That’s because the contract should define the terms of the purchase and give both parties a chance to nullify the agreement.
For example, if the buyer no longer wants to go through with the sale, they will simply lose their earnest money. However, each state has guidelines on whether a contract can even be voided its best to check the regulations first.
Of course, the terms of the cancellation will be detailed in the agreement which is why it’s important that the contract uses clear language that both parties understand. Otherwise, if the language used isn’t clear there could be issues down the line if parties misinterpret a clause.
So, if you’re still struggling to understand a purchase contract and what this document could mean for you, consider getting in touch with us at New Door Property Transfer by calling us at 610-549-4129 or emailing info@newdoorpt.com.