What Every Residential Purchase Agreement Should Cover

     

purchase agreement being signed by home sellerSometimes, when we speak to a homeowner interested in selling a house, they also talk to other potential buyers. This is something we encourage everyone to do, similar to getting multiple bids before remodeling a home. It's important for a home seller to be well-informed and to feel comfortable in the decision they are making.

Some investors use the standard CAR (California Association of Realtors) Form RPA (Residential Purchase Agreement), while others use variations of it. We personally use a boiled down version (2 pages instead of 10) that covers the most important topics. No matter who you sell your house to, make sure the purchase agreement covers:

-The obvious stuff (names, dates, correct address).

-Purchase price clearly stated and an earnest money deposit to show that the buyer is serious. Earnest money deposits are deposited upon opening escrow.

-A clear concise closing date that everyone can follow and hold each other accountable for.

-Condition of property being sold "AS IS", if that is your desire. This includes no termite, smoke detectors, lengthy request for repairs,  etc.

-Occupancy and Possession - When the key transfer will take place, responsibilty of possessions left behind at close of escrow, etc.

-Contingencies - Is the sale contingent on the buyer qualifying for a loan?  Does the property need to appraise for the purchase price?  Contingencies are in place to protect the buyer and often get in the way of an escrow closing on time.  While they're common when selling on the MLS to a conventional buyer, they're rare when selling to an investor.  

-Other closing costs (property taxes, title charges, escrow fees, etc.) - Who is paying for these? 

 Make sure to fully read and re-read a purchase agreement before signing it. If you ever have questions, call the escrow company or a lawyer to review the document before signing it. Purchase agreements are meant to protect both the seller and the buyer.

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Jennifer Shenbaum

About The Author

Jennifer Shenbaum is a real estate investor based in Southern California. She is a veteran of the housing market crash of 2007. Best of all, she offers free remodeling ideas to all who ask.