Understanding a Purchase & Sale Agreement
Once you locate a home you would like to purchase; the next step is to have your Agent submit "an offer" in writing on your behalf to the seller.
Important things to be aware of before your offer is presented.
- Time limit for your offer- usually 48 hrs is sufficient for the seller to review your offer & respond to it. However; speak with your Agent to determine what is reasonable in your situation.
- Earnest Money- the amount you will deposit in good faith should your offer result in a binding contract. You will have a certain amount of days from the binding agreement date to submit your earnest money.
- Who will hold the earnest money?- It's usually held by a 3rd party & credited to you at closing. A good idea is to have your Agents' Broker hold it; or the closing attorney.
- Closing date- think about how much time you will need to close. If you're getting a loan- the type & terms of the loan will determine when you can close; which is usually 45 days. If you're in a lease- closing a few weeks before your lease expires is ideal because it will give you time to get situated without being rushed.
- Closing Attorney- who will facilate the closing? This is negotiable; however buyers have a right to select their own attorney. Your Agent can advise you on this.
- Contingencies- is your home purchase contingent on any conditions such as financing; do you have a home to sell before completing the purchase of your new home; or will the final purchase price be contingent on the appraised value?
These are the main things to consider when structuring your offer, because once the seller signs off on it; it becomes a legally binding contract. At this point; you're expected to perform to exactly what's in the contract.
Paying special attention to the dates in your contract is extremely important and not to be taken lightly. Failure to do so could result in the lost of earnest money; arbitration or in extreme cases going to court.
I recommend asking your Agent for a copy of contracts ahead of time; even before you locate the home you're interested in buying. This will give you sufficient time to read and understand the documents involved, and to ask whatever questions you may have about any of the verbiage.
Buying a home is an exciting time; and can be a positive experience once you understand the process and what's involved.