What Is a Residential Purchase Agreement? Everything You Need to Know

Residential

Around 34% of all home sales are to first-time homebuyers.

While it’s exciting to buy your first house, it can also be somewhat nerve-racking. After all, there are a lot of things you might not know or understand, including a residential purchase agreement.

What is this agreement? What is it for, and what information does it contain?

If you’re ready to buy your first home, you’ll want to learn these things. Check out this guide to help you discover what this vital document is with a home sale.

A Residential Purchase Agreement Is a Contract

The primary thing to know about a residential purchase agreement is that it is a contract. This contract is necessary for all real estate purchases, including homes, rental properties, and commercial properties.

People also use this for as-is residential contract for sale and purchases, which means it also includes cash sales.

The person buying the home writes the offer and presents it to the seller. The buyer includes numerous details on this contract, as we’ll learn later in this article.

The seller receives the offer and reviews it. The seller has the right to accept the offer as-is or reject it. Sellers also have the option of countering purchase agreements.

As a first-time buyer, you should not write a purchase agreement until you’re sure you want to purchase a home. Therefore, you should shop around until you find the right house. Then, you can write the purchase offer.

Because this is a contract, offering it to the seller creates a legally binding deal that you must complete.

How It’s Completed

So, how do you write an offer to purchase residential property? The process is simple, yet it involves several steps. Here are the main steps required to write a purchase offer:

Talk to Your Agent

Step one is to talk to your agent. The purpose of this step is to tell your agent that you’re ready to make an offer on a home. Your agent will schedule a time to meet with you to write the offer.

Meet With the Agent

When your agent arrives for your meeting, they will bring a contract to fill out. The agent will assist with filling it out thoroughly and accurately.

Sign It

Next, you must sign the purchase offer. The offer isn’t valid without your signature. You may want to carefully review every detail of the offer before signing it to ensure accuracy.

Give It to the Seller

Once complete, your agent will forward the offer to the seller. The seller will review it when they receive it and decide how to respond.

The Information It Contains

One of the most crucial things to understand about real estate purchase offers is the information they should contain. Buying a house is a massive purchase, which means the contract will include many details.

Here is a breakdown of the most essential elements found on a residential offer to purchase a house:

Property Details

The contract must state the property details, including the address and legal description. Your agent will gather this information.

Buyer and Seller Information

Next, you must include the seller’s information, such as their name and address. You must also include your information on the contract.

Contingencies

The contingencies on the contract are the things you’re asking for or requiring. For example, you can include an appraisal contingency to ensure the home’s value is what you’re paying.

You can also include contingencies that ask the seller to leave things in the house or to fix things around the house.

Closing Costs

You can also include the details about the closing costs and who pays for them, including the inspections and TITLE SERVICES. You should be specific with what you’re asking the seller to pay for in your purchase offer.

Loan Information

A purchase offer should also tell the buyer what type of loan you’re using. The loan type might affect the speed of the sale and other factors.

Earnest Money

Finally, you should include the amount of earnest money you’re offering. You must also give a check for this amount to your agent. Your agent will transfer it to the buyer’s agent or an escrow account.

When It Becomes Binding and Ways Out of It

The final thing to understand about a residential real estate purchase agreement is when it becomes binding and the legal ways to break it.

First, the contract isn’t binding until the seller signs the document. Therefore, you won’t be under contract to buy the house in question until you see the seller’s signature on the purchase offer.

Secondly, there are only a few legal ways to break a purchase offer after it becomes a binding contract. However, you have the right to break the contract for any reason, but you risk losing your earnest money.

Therefore, you should have a valid reason to break the agreement if that’s the route you decide to take. The main legal reason you can break the contract is if one of the contingencies isn’t met.

For example, if you include an appraisal contingency, you have the legal right to void the contract if the appraised value is below the offer amount. Your real estate agent can help you learn other valid ways to break a contract.

Write a Purchase Agreement When You Find the Right Home

As you search for a house to buy, you will find the one you want. When this day arrives, you must complete a residential purchase agreement to give to the seller.

Once the seller signs it and returns it to your real estate agent, you’ll be in a binding contract to purchase the home.

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About the Author: Lisa Eclesworth

Lisa Eclesworth is a notable and influential lifestyle writer. She is a mom of two and a successful homemaker. She loves to cook and create beautiful projects with her family. She writes informative and fun articles that her readers love and enjoy. You can directly connect with her on email - lisa@lisaeclesworth.com or visit her website www.lisaeclesworth.com