A real estate purchase agreement is a legally binding agreement that governs the purchase and sale of a property. Made between a buyer and seller, it defines the terms of the transaction and the conditions under which a sale will occur.
Whether you’re planning to buy a new home, apartment or condo, or looking to sell a primary residence or investment property, it’s important to make sure your contract is ironclad.
Taking time upfront to spell out the terms under which a property transaction will occur and safeguarding against potential hiccups or unexpected events is important because it can help you avoid legal or financial hurdles on the back end.
A real estate purchase agreement spells out the terms under which a buyer and seller agree to engage in a real estate transaction. Signing a purchase agreement effectively places both the buyer and seller (as well as the property in question) “under contract.”
A binding legal agreement outlining key details of the home sale transaction, a real estate purchase agreement for a house may also be referred to as a real estate sales contract, home purchase agreement, real estate purchase contract or house purchase agreement.
In effect, when a potential buyer makes an offer to purchase a new home, the buyer will propose conditions for the sale and spell out important financial details such as their offer price. A home seller will then have the opportunity to accept, reject or negotiate the terms of this offer.
Following any ongoing negotiations, which may occur in the form of counteroffers, both parties will sign the home purchase agreement when they’re satisfied with the terms of the agreement. At this time, both the for-sale property and any parties to the agreement (for example, the home buyer and seller) will be deemed “under contract.”
This contract signals the intent of all parties to engage in a home sale transaction and explains which conditions must be met for the sale to close and ownership of the property to transfer to the new buyer.