Home Buying Sales Agreement

• The Home Purchase Agreement
• Home Buying Investment and Protection
• Major Sections of the Purchase Agreement
• Smart Home Buying
• List Your Home for Rent or Sale FREE

the Home Purchase Agreement 

The home purchase agreement is a legal document that represents the exact details of a home sale, from the price the home buyer will pay, to the responsibilities of the seller prior to closing the deal.

And because buying a home involves some very detailed legal language, it is important for both home buyers and for those selling a home to be able to recognize the key elements of the home purchase agreement. While most of the legal details will be worked out by a lawyer, a mortgage lender and a real estate broker or agent, knowing the basics can help you make informed decisions when buying or selling your next house.

home buying investment and protection

Perhaps the single most important item in this sales contract is the sales price. After all, if you can’t agree with the seller on this point, you don’t have a deal. But once you have stuck a deal on price, you will need to settle some other major issues.

Some of these are non-negotiable. For instance, lenders will not lend money for a home purchase if it has active insect infestation. A mortgage company won’t commit to lending until they are sure that the property is “free and clear” from any other legal claims on it.

Other conditions of the sale are open to negotiate, and these issues are important to nail down in the purchase agreement. Such conditions may include things like what items convey with the sale, when and where keys will be delivered to the new homeowner, time and place of the closing, etc.

major sections of the purchase agreement

Each sales contract will be divided into different sections, or “clauses” which will specify each topic. While these may be in different orders, and while some purchase agreements may or may not include certain clauses, most contracts do contain the following sections.

These sections cover issues related to the title, mortgage, pests, the home inspection, the settlement agent/escrow agent, and settlement costs.

smart home buying

Of all the items in the home purchase agreement, perhaps two of these help smart buyers in the sale. The mortgage clause specifies that the buyer should receive a refund of the deposit that the seller requires when the sales agreement is signed (usually a few, to several hundred dollars or more, depending on the value of the property) if the sale has to be canceled if the buyer can’t actually secure the loan or mortgage, or can’t get it as outlined in the sales terms.

The second clause buyers should take advantage of is the home inspection. It is highly recommended that the buyer have the home checked out to make sure that major home systems are functioning properly. These would include HVAC, plumbing, etc. The inspection should also uncover any structural problems.

To make sure you get an inspection you are happy with, you may want to pay for the inspection, even if the seller agrees to pay. That way, you know that the inspector has your best interests at heart. It is also your right to ask that the agreement include a clause that allows you to cancel the deal if you are not satisfied with the condition of the home. If this happens, you may want to discuss a lower price, or demand that the seller make adequate repairs before you close.

Information for this article based on the Buying Your Home: Settlement Costs and Helpful Information booklet, provided by the U.S. Department of Housing and Urban Development Office of Housing - Federal Housing Administration.