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If you have not purchased a home recently, you may be surprised by how complex purchase agreements are. Gone are the days of the one-page contact. Today's purchase agreements are eight pages or longer. And since verbal offers to buy real estate are not binding, your offer should always be in writing. The offer is usually drafted by your real estate agent or attorney.
Most buyers usually think only about the purchase price when making an offer. The price is important but it's just one of the many terms and conditions that make up a real estate purchase contract. Other items include the deposit, mortgage, and down payment amounts, the closing and occupancy dates, a list of what's included in the sale, contingencies to protect the parties (title review, financing, inspections, or the sale of another property), performance time periods, a list of who pays for what closing fees and who is responsible for complying with local ordinances (installing smoke detectors and strapping hot water heaters).
The document may include an arbitration clause, in case the parties come to a disagreement. It may also have a liquidated damages clause, in case the buyer defaults. There are also various disclosures and affidavits that go along with the purchase agreement.
You may wonder why so many decisions have to be made before the parties agree on a purchase price. Sellers need to know all the details of the buyer's offer before they can evaluate it. For example, even a full-price offer might not be acceptable if it's contingent on the buyers selling their home. Therefore, all the terms and conditions are included in the purchase agreement. Remember, once it is accepted, the purchase agreement is a legal document, binding on both parties.
Most purchase contracts are hastily written and many are incomplete. That's because buyers and agents want to act quickly once they find the right home. After all, the real estate market does not slow down while you're deciding if you want to buy a property, or not! Acting quickly can make the difference between getting the home of your dreams or losing it to another buyer.
MORE HINTS: Ask your agent to give you a sample copy of the purchase contract ahead of time. Read it and ask for an explanation of anything you don't understand. That way when you finally do make an offer, you will be familiar with the contract and will not feel rushed.
When making an offer, allow yourself enough time to understand the contract before you sign it. No matter how busy you are, you should sit down with your agent, carefully review the contract and decide on the specific terms you want to include.
When time and distance don't permit you to sit down in person with your agent to write the offer, it may have to be put together using a phone and fax. This process will be a lot easier if you have reviewed a sample contract in advance.
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