The purchase agreement is the instrument to write offers for Single Family Homes and Condo’s. There are 8 pages total and 30 paragraphs. I will highlight some of the more important Paragraphs.
Paragraph 1 C
This is your offer price.
This is the Close of Escrow Date. For cash offers this can be as quick as 15 days. For Financed offers, this can vary from 30 days to 45 days. You want to make sure not to close on a Friday at 5pm, because you will have to wait until Monday to set up the utilities. You also don’t want to close on a Holiday, so double check to make sure you aren’t.
This is your Earnest Money Deposit. This must be sent into escrow within 3 days of acceptance. It is best to send it on the first day, to show the seller and listing agent that you are working diligently to move the transaction forward. If there are problems getting the earnest money deposit into escrow, that is usually a bad sign for the escrow and you are certainly starting out on the wrong foot. The Earnest Money deposit is set to 3% of the purchase price. Of course this amount is negotiable, so you can write any number that you want. Most listing agents will want to see 3% of purchase price earnest money deposit or they will start to wondering why you are putting down less.
This is where you will be putting your loan balance if you are financing the purchase. This will show how much money you are putting down. If there is no amount here, then the offer is all cash.
Paragraph four deals with closing costs. I checked what is customary- though these are negotiable. If you are purchasing a condo, D4 and D5 apply so make sure you check that sell shall pay for those too.
This is where you write in anything you want to include in the sale. Some common items are the applainces- washer/dryer, stove, dishwasher, built in microwave, fridge. Also curtain rods and curtains, chandeliers, flat screen plasma tvs and mounts, and other fixtures (perhaps home movie theater projection equipment etc) If its not in the offer, you may be opening yourself to a dispute later. It is best to write everything that is carrying over with the property so that everyone is clear.
This is your inspection contingency. By default it is 17 days. Listing agents in multiple offers typically will counter back with 10 day inspections. 10 is about as short as you can go and still do a thorough investigation. During this time you will want to do your building inspection, chimney inspection (optional), foundation inspection (optional), GEO, and any other follow up inspections by various trade professionals.
Both of these are optional. I always recommend my buyers to initial liquidated damages. It limits your liability in the event of default to a total of 3% of the purchase price or your earnest money deposit. If you don’t sign this provision, you liability is unlimited. With Arbitration, I have had clients who refuse to sign it because they have had bad experiences with arbitration. My uncle who is a judge said that since both parties are giving the same thing up that it is fair. Most buyers initial this too.
By default the offer expires in 3 days at 5pm. Sometimes as a buyer, you will want to shorten this expiration to put pressure on the seller to respond quickly.