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A real estate purchase agreement template is a convenient resource for use when making the legal purchase of a property. You might also know of the purchase agreement as a residential real estate agreement or a real estate purchase contract. Another title for this important legal document includes the Agreement to Purchase Real Estate. When referencing the agreement for the purposes of buying a business, the legal form is an Asset Purchase Agreement or a Business Purchase Agreement template.
The document is necessary at some point when you are buying a property from another. It is a legal form you will eventually encounter during the home buying process. When buying a home there are myriad steps involved in the process, all of which happen before the simple purchase agreement template can be filled out with the information the document requires. First you must work with a broker to help find the home you want (a process that can take weeks or months depending on what you’re looking for and property availability). Then the complex negotiations process begins, wherein you make a counter offer to the seller’s initial price.
The negotiations might go on for some time before an agreement is made between seller and buyer. What you, as the buyer can afford, and the conditions of the market at the time play a crucial role in the home bidding process. After the trials and tribulations of home buying negotiations happens, it’s now the time when the home buying contract is written up. It is the stage where the real estate purchase agreement template takes on considerable import.
The purchase agreement for buying a property is a legal contract. The parties in the contract are the seller(s) and the buyer(s). The contract is one called a bilateral agreement between the parties. It is legal form binding both parties to the agreement defined within the document. It makes for clear terms when buying, exchanging, or giving any form of real property from one party to another. The document defines the Considerations within the text; This term is a reference to the funding the parties agree to during the negotiations process.
The Consideration part of the document is not only a reference money, but it also defines the terms when the parties agree to a promise to pay (Promise to Perform) or an exchange is part of the agreement. It is important to note that the purchase agreement is one that is only in instances where the property in question has no incomplete construction.
What purpose does it serve?
The simple purchase agreement template serves to protect the buyer and seller. It is a form that documents an agreement so that each party ensures fair treatment during the transaction. The document template allows for the ease in creation of a complex document. Some of the most basic details the legal form covers include:
- The contact information of the seller and information on seller identification. This is vital and required information clearly identifying the present owner of the property before its transfer.
- The contact information of the buyer and information on buyer identification. This is vital and required information clearly identifying the party the property transfers to once the terms of the agreement are met by the buyer(s).
- Information about multiple sellers and/or buyers. When there are multiple parties involved in the agreement, all parties are identified in the agreement.
- The details of the property as the county as it listed in parcels. This makes clear to county officials what property is sold based on land survey information.
- Financing information and the price of the property to which the parties have agreed. This makes clear how the buyer will pay for the property. it also defines the final price agreed to for the completion of the sale.
- The date the closing will occur. Closings are important meetings involving the presence of legal representation. The date the home owner takes possession of the property is covered during the closing.
- Home owner’s insurance information. The home must remain covered during the process of the loan.
- Information on the ways in which conflicts will see resolution. Clear parameters for dealing with differences in relation to the contract are put into writing.
- The contract termination details. This includes the steps the buyer must take in the event they want to pull out of the contract to buy.
- Other important facts and information in relation to the home buying process. This section of the real estate purchase agreement will cover things like funds, escrow details, warranties (if applicable), home inspection information, and property title requirements.
Once the contract is written, the buyer needs to be aware that until the closing on the property, the buyer has the option of selling to another party with a better bid or not selling at all. The real estate purchase agreement does not force the seller to follow through the sale of the property. Only the sale, which is set for the future or closing date, is the purchase of the property a sure thing. The contract you create before the final sale is the purchase agreement defining all the responsibilities of involved listed parties.
Who should use the purchase agreement template?
If you are planning to sell a piece of property, the template is ideal for presenting a potential buyer with details explaining all the steps involved in the sale, from negotiations to the date of the house closing. The contract is also one that the buyer can present to a seller to formalize the sale of real property.
The document defines how a piece of property will be transferred but it is not enact the transfer. It only puts forth the definitions of what both parties are agreeing to in relation to the completed sale and transfer of property. The purpose of the document is for making clear the responsibilities of each party taking part in the bilateral contract.
The document is something suitable for anyone looking to protect themselves with a legally-binding document describing the terms parties are agreeing to when buying and selling an asset. In general, the document is useful to:
- Home sellers: Whether selling through private sale or with a real estate broker’s aid.
- Home buyers: Whether buying through a private sale or with the help of a real estate agent.
- Real Estate Lawyers: Usually the contract overseer and creator at the home closing.
- Business sellers and buyers: For commercial property sales.
The real estate purchase agreement template makes the creation of the legal home buying contract easy. If you are a private seller looking to protect your commercial interests when you make the sale of your home, the template is something you can use for contract creation. The contract is one that is necessary if the private seller plans to finance the property for the homebuyer. It can define the promise to pay terms both parties agree to so all party responsibilities are clear and legally-binding.
If the transaction is occurring between family members, emotions or family issues might arise. The simple purchase agreement template allows for legal contract creation which disallows any emotional or familial issues to effect or change the responsibilities of the parties within the contract. Following contract finalization, it gives one or both parties legal recourse if one of the parties in the contract breeches the agreement. The asset purchase agreement is suitable whenever you are selling a property that has a pre-built home, formerly owned home or when buying a property where the construction is complete.
Above the most basic of document elements appear. The contract for buying a property may have unique elements within it, depending upon the parameters of the agreement. One element includes the Promise to Pay, which defines the financing parameters. There are four types of financing terms the buyer and seller might agree to:
- Mortgage Assumption Solutions: The real estate purchase agreement might also define the terms of having a home buyer take responsibility of a home seller’s existing mortgage. The loan becomes the buyer’s responsibility, but only if the buyer can meet the parameters defined by the lender who holds the loan. The buyer’s credit, job history, and available funds will play a role in the approval of this type of home financing solution.
- No Home Financing: The home must be something the buyer pays for in full to buy it.
- Private Seller Home Financing: If a buyer cannot get a loan for whatever reason, the seller might offer private seller home financing solutions. Some sellers who own the home “outright” and who do not have to pay off a mortgage might offer private seller financing solutions.
- Third Party Home Financing: Here the buyer works with a lender who gives the buyers a monetary loan for the purchase of the home. The buyer pays the lender over an agreed to term for the property. The loan size and interest rate is a factor figured on buyer credit rating.
There are many other elements buyers and sellers might include in a contractual agreement. These elements are something that lends clarity to the agreement. Each inclusion also serves as an extra level of legal protection for both parties. Here are some more contractual elements you might encounter:
Earnest Money: Within the simple real estate purchase contract, there may be a mention of Earnest Money. This reference signifies the down payment the buyer offers to prove a solid interest in the home. The Earnest Money stays the property of the potential buyer until the contract reaches finalization. If the seller ends up selling the home to another, the Earnest Money funds go back to the buyer who did not buy the property.
Escrow Parameters: This defines who the third-party is who will hold onto and protect any monies that end up transferring to the buyer once the home becomes the possession of the buyer. The transfer occurs at the closing of the home. The third party is a choice for keeping all funds protected until all contractual elements, including financial, insurance coverage, and inspections, are fulfilled.
Disclosure Information: Many states require the home buyer make clear any information the buyer needs to know about the home before the sale can take place. For example, if the home needs repairs or if there is an issue that might otherwise influence the value of the property, the buyer must let the seller know in writing about these issues. The buyer needs to be aware of any additional costs they face once they own the home.
Some of the mentioned issues you might see in a contract include problems with the structure of the property, mold or pest control issues, broken appliances, roof or other home defects, and anything that has happened in the home’s history that might otherwise change home value or deter a buyer from wanting the property. With clear disclosure, the buyer goes into the contract knowing exactly what they are getting for their money.
Other elements of contract creation include:
- The inclusions of property.
- The exclusions of property purchase.
- Property deposit before purchase.
- Costs of home closing and what party handles specific costs.
- The potential closing date (Which can only happen with both parties fulfill all contractual obligations).
- Parties signatures.
- Home buying Contingencies: including mortgage details, home appraisal information, professional home inspection requirements, pre-sale of other property requirements before funding new sale, and opt-out options for buyer and seller.
A purchase agreement is something that is a complex document. It needs to have all the right elements in it to protect both the buyer and selling during the home sale transaction. The use of a real estate purchase agreement template makes it easy to design a legally-binding document. It helps the buyer and seller ensure clear, concrete terms for the sale of the property. The template is a suitable resource to ensure every contractual element the document should have is one the contract covers. The template is something every buyer/seller needs to buy a home with confidence.
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