THE HOME PURCHASE AGREEMENT
The home purchase agreement your Realtor uses, although tailored to each specific transaction like yours, is based on a form designed by the Association of Realtors ®, a local Association of Realtors ®, or a private publishing company. Any changes you make must be approved in writing by the seller.
In the United States, you must have a written purchase agreement, signed by all parties, in order for it to be and enforceable contract. In fact, Elizabeth Axelgard cannot even present your offer to buy without it being in writing and signed by you. Everything in the offer must be perfectly clear. Those stipulations and provisions might include things like personal property you want to be included, time and date you expect to take possession of the property, a specification that the owner must repair any existing damage as well as rectify the problem that caused or is causing the damage, and so on.
Elements in the home purchase agreement will include:
- Sales price
- Deposit. This is customarily 1-2% of the purchase price and will be credited toward your down payment or closing costs, or returned to you if your offer is rejected. Note: you might forfeit the deposit if you drop out of the agreement against its terms.
- Clear Title. This provision requires the owner to turn over possession unencumbered by 3rd party claims against the property. Note: responsibility for paying for title insurance is negotiable.
- Mortgage Clause. This item specifies that the sale of the home is contingent upon the buyer obtaining the loan. There should be a clause providing for a refund of the deposit if the loan is unobtainable.
- Pest Inspection. You might like an inspection in order to verify that the home is free of pests and dry rot. This clause should specify whether you, the seller, or both should pay for any eradication or repairs related to infestation.
- Home Inspection. There definitely should be a requirement in your agreement for a home inspection by a licensed inspector or general contractor. It will determine the status of the home’s structure and systems. It’s common for the buyer to pay for this service(usually at a cost of $300-700) in order to be assured that the report is objective and accurate. If the general inspector recommends additional inspections of specific structure elements or systems, those should be requested and carried out.
- Contingencies. All specific conditions that you specify in the purchase agreement must be met prior to the closing of escrow. Note that it is more likely that home sellers will accept a greater number of contingencies in a slow market. Just be sure your conditions are important and necessary.
- Escrow Company. This is also the company acting as the title firm, and the entity providing title insurance. The escrow company is usually chosen by the buyer, although the title insurance may be paid by either party.
- Closing Costs. These expenses are negotiable between buyer and seller, although the actual payment is usually made according to local custom.
Withdrawing an offer
Withdrawing an offer is possible, without ramifications in many cases, up to the point at which it is accepted by the seller. Consult with Elizabeth Axelgard regarding the most expedient, efficient and safest way to withdraw your offer.
Seller’s response to the offer
Of course, the seller has the right to make a counteroffer. If that occurs, it’s up to you to either accept it, or return it with your own counteroffer. Until that time, there is usually an opportunity for negotiation. Remember that the document only becomes a binding contract when it is accepted and signed unconditionally by both parties. When that happens, and all contingencies are subsequently met, you can relax until the closing of escrow.