Whenever you’re looking to buy a new home (or even sell one), a real estate purchase agreement is one of the first things you should ensure to draft. This type of written contract is utilized to describe all the terms and conditions of a property deal between a seller and a buyer. It is typically only employed in cases where the construction of a home has been finished.
This is especially crucial if you are a homeowner who chooses to represent yourself in selling your property instead of using a real estate agent, a scenario known as For Sale By Owner (FSBO). According to a 2018 report by the National Association of REALTORS, FSBOs represented 7% of all home sales in the United States in 2017. The typical FSO property also sold for roughly $200,000, or about $65,000 less than agent-assisted home sales. That report also found that 12% of FSBO sellers faced difficulties understanding and completing paperwork related to the sale of their property. So, if you have ever felt overwhelmed by the documents pertaining to home transactions, you’re far from being alone.
Here are several elements you should verify to include in a purchase agreement, as well as the potential negative consequences of not preparing this type of contract.
Preparing Your Contract
Fees are often included when a purchase agreement is first devised, although they can also sometimes be tied to the seller’s commission fee. A handshake may have been enough in the old days to secure a home deal, but now a written agreement is widely considered to be the proper way to handle a real estate sale. Make sure you are knowledgeable about all your state’s laws regarding properties and what your rights are before you proceed.
Broker Vs. FSBO Details
As previously mentioned, a sale will almost never be carried out the same way if a real estate agent is used and when the seller chooses to perform the transaction on his or her own.
Avoiding Costly Lawsuits
The most common reasons for drafting a purchase agreement include a seller wishing to conduct a private sale and a seller financing the buyer for the property purchase.
However, such a contract is also a great way to prevent costly lawsuits. According to a 2019 article, roughly 41% of listed homes in the U.S. have a price reduction before they receive an accepted offer. Therefore, it’s important to clearly list everything in your purchase agreement (and to have a clean title) in order to avoid claims from the other party.
What To Include In Your Agreement
Any real estate purchase agreement should include the following items:
- Buyer and seller details
- Details on the property
- Pricing and financing
- Closing and possession dates
- Conflict resolution
- An option to terminate
A reputable real estate agency should be able to help you customize each part of your agreement.
The Important Role Of A Third-Party Professional
In real estate, third-party financing occurs when a bank or other lending company offers a buyer a loan, which needs to be repaid within a certain time frame. Approval for said loan usually depends on the applicant’s credit rating, job history, and other financial factors. Other types of financing options include seller financing and assumption, the latter of which involves a buyer taking over the seller’s mortgage payments.
Speak To A Professional Title Company
Speak to the experienced professionals at Mathis Title Company in Fairfax, Virginia to learn more about the importance of a purchase agreement and for assistance drafting up this contract. Mathis Title’s real estate attorneys are ready to help you with every aspect of contract negotiation and review. They will also make sure that your home title, documents, and funds transfer are all legally binding.
Mathis Title serves customers in Fairfax, Alexandria, Arlington, Chantilly and McLean, among other areas in Virginia. Robin Mathis is an attorney who was sworn into the U.S. Supreme Court and who boasts more than 35 years of experience. She has performed thousands of closings (small commercial and residential), and she is highly knowledgeable about both the buyer and seller sides of real estate transactions.
Mathis Title Company will certainly help you understand your rights and show you how you can benefit from a real estate transaction. They provide assistance with refinancing, mechanics lien, settlements, and title insurance. Contact them online for more information or to schedule a consultation. You’ll hardly find a more reliable real estate company in your area!