A purchase agreement (also called a sales contract) is the legal document that outlines the terms and conditions of the sale when you’re buying a home. Think of it as the official blueprint that both the buyer and seller agree on before the home changes hands.
What can I expect to see on a purchase agreement?
| Section | Details |
| Buyer and Seller Information | Names and contact details of both the buyer and seller. |
| Property Description | Exact address and legal description of the property being sold. |
| Offer Price | The price the buyer is offering, including any deposit (earnest money). |
| Financing Details | Loan type (conventional, FHA, etc.), down payment, and any financing contingencies. |
| Closing Date | The date when the buyer takes ownership, and the final transaction occurs. |
| Contingencies | Conditions such as inspections, appraisals, and financing that must be met for the sale to proceed. |
| Closing Costs | Specifies who will pay for what, including agent commissions, title insurance, and taxes. |
| Property Condition and Disclosures | Seller’s disclosure of known issues with the property, ensuring transparency. |
| Inclusions/Exclusions | Items included in the sale (like appliances) and items excluded (such as personal belongings). |
| Signatures | Signatures from both the buyer and seller to make the agreement legally binding. |
Who will provide me with the purchase agreement?
The purchase agreement is typically provided by one of the following:
| Who Provides It? | How They Do It | Why It’s Done |
| Real Estate Agent | Uses a standard template and fills in details. | Agents know the legal requirements and ensure all necessary conditions and contingencies are included. |
| Real Estate Attorney | Drafts or reviews the purchase agreement. | Attorneys make sure the contract is legally sound, especially in states requiring attorney involvement. |
| Seller’s Agent | Sends the purchase agreement to the buyer’s agent. | This happens when the seller already has a standard agreement prepared. |
| Online Tools (for FSBO) | Provides templates and instructions for a legally binding agreement. | For FSBO transactions, these tools help create a contract when no real estate agent is involved. |
Why is a purchase agreement important?
A purchase agreement is essential because it protects both the buyer and seller by clearly outlining expectations and legal obligations. If either party fails to meet the terms, this document can be used to resolve disputes legally. In short, it’s the roadmap that ensures both sides are on the same page and that the home-buying process goes as smoothly as possible.
What part of the homebuying process does the purchase agreement come up in?
The purchase agreement comes into play after your offer on a home has been accepted but before the closing process. Here’s how it fits in:
| Stage | What Happens |
| Offer is Accepted | Once the seller accepts the buyer’s offer, the purchase agreement is drafted. |
| Signing the Agreement | The buyer and seller sign the purchase agreement, making it legally binding. |
| Next Steps | Earnest money deposit, scheduling inspections, appraisals, mortgage approval, title search, and insurance before heading to closing. |
After the purchase agreement: next steps
Once the purchase agreement is signed, you’ll usually submit an earnest money deposit to show you’re serious about the purchase. From there, you’ll schedule a home inspection and appraisal, apply for your mortgage (if you haven’t already), and conduct a title search. Then, it’s off to closing!
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.