Terms to Watch for in a Purchase Contract

Reviewing your purchase contract is crucial

A purchase agreement is a legally binding contract that is signed by homebuyers and sellers that confirms that all parties agree on the purchase price, closing date, and other terms.

Reviewing your purchase contract is crucial as it contains relevant information including how much you’re paying, when you are to pay it, under what conditions you can back out, and more. While it can vary, there are certain things you will want to be familiar with when purchasing your Washington home.

Settlement Date

Also known as your closing date, your settlement date will be the day that all involved parties will meet and officially make the sale. This date is usually negotiated by you and the seller.

When choosing a date, make sure to give yourself plenty of time to fulfill the home inspection, appraisal, and any other contingencies. If you fail to meet the obligations in the purchase agreement by the settlement date you may risk losing the sale.

Possession Date

The possession date is the day when you can actually move into your new home. In general, this day is 30 to 45 days after the closing date but can be as little as the day of.

This date is negotiable and can affect the strength of your offer. For instance, if the seller is still living in the home, allowing a few weeks (or even months) for them to find a new place could make your bid more attractive.

Earnest Money

Earnest, or “good faith,” money is the money the home buyer commits to completing the sale to show the seller that they are serious about buying the home.

A purchase contract will require you to put some money upfront in the form of an Earnest Money Deposit (EMD). This amount is negotiable between both parties and is usually 1-2% of the purchase price. Once accepted, the money is generally held by a title company to be used as credit towards your down payment and/or closing costs. The amount of your EMD may play an important role, especially if the home is receiving many offers.

Fixtures and Appliances

It’s important not to assume anything when purchasing a home. If you’re expecting the home to come with the refrigerator, oven, washing machine or more, these items should be included in the purchase contract.

Contingencies

To continue with the home buying process, you may have a few contingencies listed in your purchase contract such as selling a property you already own, getting a home appraisal, inspection or mortgage approval. Contingencies will protect you by allowing you to back out of a sale if something doesn’t feel right, usually without losing your earnest money deposit.

While you should review the entire purchase contract when purchasing your home, these are a few key points that you are guaranteed to see.

If you are looking for a home in Washington, give me a call at 360.798.4161 to find out how you can get pre-qualified for a mortgage!

Leave a Reply

Your email address will not be published.