Property 101: Real Estate Purchases Agreements
Most people aspire to own their own home. It’s a big-ticket item that is most likely to be the biggest asset you’ll ever have so it’s with some relief that real estate transactions must use a legal contract.
The process of buying or selling a property is bound by a legal agreement called a real estate purchase agreement and its purpose is to protect both the seller and the buyer.
The document is used realtors when they secure a property listing and it’s a working document that may go through many revisions until it’s gone unconditional i.e. all the conditions have been met by both parties.
Owning your own home is a milestone worth celebrating. The home buying process is considered very stressful particularly for first home buyers so it pays to be well prepared and knowledgeable before putting in an offer. To get off on the right path to homeownership, focus on what you need to purchase a home.
What To Do Before You Buy Your First Home
Build up a healthy deposit. Make sure you understand how much deposit is required i.e. 20 per cent of the purchase price is a good benchmark. Therefore if the property can be purchased for $500,000 then your deposit will be $100,000. Your deposit sum can be reduced when you use the Government grants and other first home buyer deals available like tax benefits. Get pre-approval on a home loan so you know exactly how much you can pay for a property.
Real Estate Purchase Agreement
When you’re ready to purchase a home, view properties for sale and when you’ve found a home to purchase make an offer. This is presented on a contract called a real estate purchase agreement. Remember this agreement can be altered to include your conditions. For example, a condition that you can secure the mortgage, another that a building inspection is satisfactory.
The contract is used to present the seller’s price and conditions and then prospective buyers can counteroffer and add their own conditions to the agreement. Often the sales process for a home is competitive, with many interested buyers in what is called a multi-offer scenario.
When there are many offers for a property, the seller can pick which agreement is closest to his requirements and then either accept it or negotiate further until both the buyer and seller accept the real estate deal.
Once the contract is agreed upon by both parties, their legal representatives manage the communications and holding and disbursement of property title and funds. The conveyancers or lawyers use an escrow company to hold the funds before disbursement. In some countries, it’s a lawyer’s Trust account that holds the funds.
Can You Buy Property without a Real Estate Purchase Agreement?
No, property transactions require the contract. You can sell and buy real estate without using a real estate agent. All you need to do is acquire the agreement which is straightforward as you can use printable real estate purchase agreements. Grab one and save as a PDF.
Get familiar with the terms of the agreement before you need to sign it. Seek legal advice on the ‘small print’ which uses legal jargon and is therefore not easily understood by laypeople.
Remember the written contract gives both the buyer and seller protection. Not all transactions to according to plan and if a seller or buyer reneges on the deal the legal agreement is there in writing and if mediation falls a court settlement may be required.
With the real estate purchase agreement available online, first time home buyers can get it and learn all they need to know about it before it comes into play. It’s impossible to relieve all the stress associated with buying your first home but being well prepared with your finance and understanding the sales process will lessen its effect on your health so once the deal is done, all you need to do is celebrate your success.