A purchase agreement defines each party’s rights and duties, ensuring neither buyer nor seller can change key terms unilaterally. It sets clear expectations on price, closing date, contingencies and more.
With deadlines for inspections, financing approval and title review, a purchase agreement helps minimize surprises and preserves your earnest money if issues arise.
A purchase agreement in real estate is a written, legally binding contract between a buyer and a seller that outlines all material terms of a property sale.
When buyer and seller sign the document and all conditions (contingencies) are satisfied or waived, the agreement is enforceable by law.
Most markets use a standard form drafted by the local Realtor® association, then agents add or modify clauses via custom addenda to reflect unique terms.
An offer to purchase is a proposal; a sales contract (purchase agreement) is the accepted, binding agreement.
An option to purchase grants the right (but not obligation) to buy later; a lease-purchase combines a rental term with an eventual purchase.
Use an option when you need time to decide; use a purchase agreement once both parties are ready to contract.
The sale price is the agreed purchase amount; earnest money holds the offer and is credited at closing.
Typical contingencies let buyers confirm loan approval, inspect the property, and ensure the value meets the contract price.
Defines when funds are due, when the deed transfers, and when the buyer takes possession.
Outlines consequences if either party fails to perform—such as deposit forfeiture or specific performance suits.
Submit a written counter-offer or addendum outlining modifications; both parties must sign to agree.
Be specific about deadlines, acceptable defect limits and financing sources to avoid ambiguous interpretations.
A binding contract forms when the seller accepts the buyer’s offer as written and notifies the buyer.
Earnest money demonstrates intent to perform; though not required, it reinforces the contract’s seriousness.
Once contingencies are satisfied or waived in writing, the agreement advances toward closing.
Buyers can cancel without penalty by timely invoking inspection or financing contingencies.
Buyer default often leads to loss of deposit; seller default may force them to return funds and cover buyer’s costs.
Non-performance can trigger deposit forfeiture, demands for specific performance or damages, and attorney’s fees.
Buyers commonly pay loan fees, appraisal and inspection; sellers handle agent commissions and recording fees.
Title insurance may be shared or split per local custom; transfer taxes often fall on the seller.
All cost allocations are negotiable—buyers may ask sellers to cover appraisal or home warranty fees.
Buyer formally applies for a mortgage and submits required docs to satisfy the financing contingency.
Arrange a home inspection, order an appraisal via the lender, and engage a title company for a search.
Verify agreed repairs, confirm no new issues, and gather funds, ID and keys for closing.
Real estate agents prepare standard purchase agreements, negotiate terms and coordinate between parties.
Hire an attorney for boundary disputes, complex commercial deals or when unusual clauses are needed.
Yes. In real estate, “purchase agreement” and “sales contract” are interchangeable terms.
Generally 1–3% of the sale price, held in escrow by the title company or brokerage.
If you include and timely invoke a financing contingency, you can cancel without penalty.
Costs are negotiated but follow local customs; transfer taxes typically fall on the seller.
The agreement sets the closing date, often 30–60 days after contract acceptance.
