FAQ ~ What's In a Residential Offer to Purchase and Contract?

By
Real Estate Broker/Owner with MoonDancer Realty, Dillsboro,NC NC# 218097
 

CongratulatiFAQons, you’ve decided upon the house you want. Now is the time to (gulp) make the commitment and put the offer in writing. Over the course of looking at houses, your buyer agent probably made good use of the togetherness time in the car by explaining “What’s In A Residential Offer to Purchase and Contract?”.

The first thing to understand is that the document is a collection of mutually acceptable promises or terms. If both parties do not agree initially, then both sides counter offer and compromise until the contract suits both parties.

There is a lot of language about the legal description of the property, the names of the parties, the conveyance of clear and marketable title and what does or does not convey with the house. Be prepared to spend quality time with your agent reviewing all of these terms.

The salient parts of the most common types of contract to purchase a house would be:

  • Purchase Price
  • Earnest Money Deposit (aka “Good Faith Money”)
  • Possibly a Due Diligence Fee
  • Financing Terms (how will you pay for this purchase? Cash? What type of loan?)
  • Seller Contribution (are you asking the seller to pay towards your closing costs?)
  • Due Diligence Period (a reasonable amount of time to perform any and all inspections, allowing sufficient time to negotiate for repairs if necessary. This period also specifies TIME IS OF THE ESSENCE for the buyer to withdraw from the contract in writing by the expiration date).
  • Closing or Settlement Date (be sure to consult with your lender when calculating this date. There could be consequences to closing late).

Broken down into its most simple components, it doesn’t seem as overwhelming, does it? It isn’t, as long as both parties enter into the contract with pure motives and good intentions. Buying a house isn’t a game although it can be an enjoyable experience. There are protections in place for both parties. For example, if your Home Inspection turns up terrible repair issues, the Buyer has the right to either ask for repairs or financial consideration…or withdraw from the contract…all within that important Due Diligence period. The Seller has the right, if requested to do so, to make the repairs or compensate the Buyer so they may make the repairs themselves. They also have the right to NOT make repairs, leaving the decision up to the Buyer to accept the house “As Is” if they choose.

Buyers and Sellers alike can feel empowered in this residential contract process, as long as they understand that both parties have put sincere promises into play and have both entered into the contract with a commitment to proceed towards a successful closing. Contracts shouldn’t be mysteries and all parties concerned should have a good idea of “What’s in a Residential Offer to Purchase and Contract?”, long before they enter one!

 

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MoonDancer Realty Team Photo Collage copyright 2012 Mona Gersky

 

 

Unless noted otherwise, all photographs & content are my own and will only be shared with the courtesy of a written request for permission. 

 

 

   

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Winston Heverly 07/29/2012 01:20 PM
Topic:
Real Estate Best Practices
Location:
North Carolina Jackson County Dillsboro Moondancer Realty Office
Groups:
Independent Brokerages
Selling Soulfully
Dedicated Bloggers
Advice for Buyers
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Tags:
faq
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home buyers
moondancer realty

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Rainmaker
2,432,181
Captain Wayne - Rowlett Real Estate School
REcampus Fully Accredited Florida ONLINE & Classroom Training in Destin, Pensacola Florida - Panama City Beach, FL
Rowlett Real Estate School / Owner and Instructor

Good Morning Mona, great job on the FAQ.  This is very informative for buyers and sellers both.

Jun 05, 2012 09:34 PM #1
Rainmaker
1,675,919
Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

If it was just as simple as that, what are those single line of eight pages of text doing there? Though I think buying a car and financing it has more pages. Go figure...

Jun 05, 2012 09:39 PM #2
Ambassador
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Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Wayne, thanks.  I think this contest was a brilliant idea and definitely forced me to distill some useful information into posts I will easily be able to email links to.

Winston, eight pages sounds like heaven...ours is 10 pages plus addendums!  I haven't bought a car in a while, I shudder to think what those contracts are!

Jun 05, 2012 09:45 PM #3
Rainmaker
3,201,109
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hi Mona,  It is always amazing that some buyers just want to sign with out reading it,  I send more time explaining it that they know what they are signing that they have no surprises.  (In Ohio with Grand kids, had peiorges yesterday)

Jun 05, 2012 11:56 PM #4
Ambassador
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Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Will, you make me jealous...pieroges...yum.  Yes, I can't tell you how many buyers' eyes glaze over when we start reviewing.

Jun 06, 2012 12:41 AM #5
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Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

Mona, Very good information.  First time buyers are always so apprehensive about the contract.  This highlights the important parts very nicely.

Jun 06, 2012 01:26 AM #6
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Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Belinda, I think it makes a great deal of difference if a buyer can discuss what the different parts of a contract are long before they are in one.

Jun 06, 2012 02:46 AM #7
Rainmaker
226,477
Suesan Jenifer Therriault
JTHIS-Professional Home Inspection Team - Blakeslee, PA
"Inspecting every purchase as if it were my own".

Mona I think you presented the information in a simple enough matter to set a home buyer at ease with the process. I'm always amazed that so many never really read the contract prior to signing it.  

Jun 06, 2012 03:17 AM #8
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Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Suesan, I'm equally amazed that there are agents who don't have these conversations so that the buyers can get comfortable ahead of time with the concept of going under contract.  Thank you for commenting.

Jun 06, 2012 07:31 AM #9
Rainmaker
755,382
Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

Mona, this is a great new series for the consumer. You'll be getting hits on these FAQ forevermore.

Jun 06, 2012 10:56 AM #10
Rainmaker
3,632,326
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good evening Mona. I always give my new clients a blank contract along with other documents to review. Familiarity with the instruments and understanding of the process is so very important. Nicely written.

Jun 06, 2012 11:47 AM #11
Ambassador
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Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Jill, thanks. I plan to make good use of them too.  I'll also see if there are links to other member's FAQs that I can use.

Sheila, we also give sample Offers to Purchase to that clients can review them early and often.

Jun 06, 2012 01:14 PM #12
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