Thu March 1, 2012, 5:26pm
Real Estate Purchase AgreementA real estate purchase agreement is a comprehensive contract signed between the buyer and the seller during the trading of real estate property. An agreement for purchasing commercial space can be extensive and requires stringent compliance to every legal procedure, while a contract for selling a house can be simple and short, as it involves two interested parties.
While making purchases for real estate property it is crucial to hold valid and legal documents that can safeguard you against fraudulent activities and illegal third-party claims. Without appropriate paper work, your chance to hold and prove your right over the property stands feeble, if challenged in the court of law.
Features of Real Estate Purchase Agreement
EARNEST MONEY is the amount of check offered upfront by the buyer to indicate the sincerity in his/her intention of purchasing the property/land. Referred as a good faith deposit, it is usually between 1 to 2% 5 of the purchase price.
For successful deals, the earnest money is usually bundled as part of the down payment. However, if the deal goes wrong, your real estate purchase agreement form should resolve the unhappy situation. The “earnest money” clause states the situations or circumstances when the seller can maintain the money and when it must be returned to the buyer.
PROPERTY INSPECTION is pertinent to purchasing the real estate land. Akin to test-driving a vehicle before purchasing it, property inspection exposes all the damages and suggests the essential repairs to be made.
The real estate purchase contract should provide sensible time limit for the initial inspection, in addition to a time extension if any repairs are to be done by the current property owner (seller).
Further, the real estate purchase form must reflect the damages for which the seller is liable for making repairs. Secondly, if the repair is paid by the seller or the buyer receives a discount on the purchase price, instead.
CLOSING COSTS are the expected coverage costs like property inspection cost and cost of repairing damages. Both the buyer and seller can haggle on the purchase cost, however, if the deal is already superbly done, then there’s no need for a bargain.
The real estate purchase contract should clearly identify the party(s) involved in making the closing costs. Appraisal fee, recording fee, property inspection fees, title costs, mortgage fee and insurance costs are a few pointers to consider, here.
How to use Real Estate Purchase Agreement When Purchasing a Home.
The format of the real estate purchase agreement charts the name of both parties, i.e., seller and buyer along with their social security number. Further, it lists the property address, intent of both buyer and seller and legal details of the property. Additionally, the form includes extra features combined with the sales of the property like housing fixtures, equipments or furniture. It is compulsory to list all the extra details as it facilitates the settlement of a dispute in the court of law.
The next part of the standard real estate purchase contract form indicates the financial terms of the agreement. It displays the initial deposit on the property, total amount of cash exchange, any mortgage or debts taken, legal fees paid on the sale of the property and the final amount received/paid on the property.
Prior to the transaction, the real estate purchase agreement must be appropriately formatted and detailed. Usually, the real estate agent convinces the buyer to make maximum deposit, before signing the deal. However, it entirely depends on individual thinking regarding the initial deposit amount.
In most cases, you require a home loan to pay for the property. A pre approval from the bank does not guarantee obtaining a loan; hence, this precise condition must be stated in your contract to avoid any legal hassles, afterwards.
Thoroughly check every term and condition written in the contract prior signing it. If any special circumstance specific to your deal, should be mentioned as special quotes within the agreement, so that it can be addressed. Be specific and precise of your objectives from the purchase. If in doubt, it is best to clear them, before the deal is ready for closing.
Finally, the real estate purchase agreement should mention the type and amount of fee paid by the seller and buyer. If the agreement does not define these parameters, the seller is expected to pay for the entire expenses during the process of deal.
A real estate purchase agreement is the valid and legal document that safeguards your property against frauds and third-party false claims. Should your rights over the property be challenged in the court of law, the documented and recorded real estate purchase agreement legally supports your validity.