From the time you make an offer to buy a house to closing the deal, there are multiple forms and legal contracts that need to be signed. This process, or series of processes, can be overwhelming, but with the right counsel and legal representation, both parties will be assured that their interests are being looked out for. Making an agreement to a contract is a very serious matter and must be followed closely. The first form that is usually filled out is the offer, a standard form entailing the offer price and what comes with the offer.
The next step after a seller has accepted your offer is to negotiate the sales contract or sales agreement (sometimes called a purchase and sales agreement). This contract is legally binding, defining the terms and conditions of the purchase. It will cover the price of the deposit, rights to inspections and other issues. This is a detailed and defined version of the original offer form and is final when agreed upon. Usually, after providing the original offer contract, you likely paid a small security deposit. Now, after the actual sales contract is drawn up, a larger deposit is required, which is sometimes 10% of the sales price and may be collected at the close of the sale. Any breach of contract will result in the seller keeping this down payment.
The purchase agreement will usually require the buyer to acquire financing, often to more than one lender. This can be a tricky time, especially when some contracts give application deadlines. All of this ensures to the seller that the money has come together before the closing date. Also, multiple lenders get the buyer the best possible percentage rate. Other aspects of the purchase agreement require the home to be inspected, agreed on, and a title search of the property. If that comes back with information that the seller owes back taxes on the property, the government may have attached a lien against the title, thus eliminating any chance for a sale.
The purchase and sales agreement also allows you a final walkthrough of the property on the actual day of the closing. This ensures that no new major problems have been introduced since the original inspection. If anything has come up, you can legally terminate the agreement at that point. You can check things like the land survey, the radon inspection, lead paint disclosure and the smoke detectors. All of this is tied into the contract and once agreed upon, the close is finalized. If you fulfill all the bank’s requirements and meet all deadlines, the process should be a smooth transition into your new home.