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Why use a purchase
agreement?
Purchase agreements are the most important document
in any real estate transaction. The purchase agreement lists many key
ingredients of the agreement between the buyer and seller, including:
- the purchase price;
- the date of closing and the date of
possession;
- earnest money amount, down payment amount, and type
of mortgage;
- what personal property will stay with the
home;
- whether the buyer will have a professional
inspection and if they can cancel the agreement if they do not like the
inspection;
- whether there are any contingencies (conditions) on
the agreement; and
- who will pay the property taxes.
Purchase agreements go into great detail defining
what should happen if any of the following events occur:
- a problem with the home's title,
- a property tax assessment is proposed or levied
against the property,
- the buyer or seller default on part of the
agreement,
- the property is damaged before closing,
The purchase agreement also describes numerous
promises that the seller makes to the buyer, such as stating that the property
does not have environmental problems, whether the property is leased by someone
else, or if the property has a well or septic system.
The purchase agreement should document everything
that is important to a buyer and seller in a transaction. Verbal statements by
the buyer or seller cannot be relied upon unless they are also written into the
purchase agreement. Many purchase agreements have a section that states "Buyer
acknowledges that no oral representations have been made...and buyer relies
solely" on the purchase agreement. For example, if the buyer has verbally agreed
that an old refrigerator in the basement can stay with the property, that should
be written into the purchase agreement.
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