Understanding a Purchase Agreement

Purchase agreement document for filling and signing on desk, with a pen, glasses, and a calculator.

A purchase agreement is a legally binding contract outlining the terms and conditions of the sale of a property between a buyer and a seller. This agreement serves as the foundation for the real estate transaction and includes important details such as the purchase price, financing terms, contingencies, and deadlines.

Here’s a breakdown of key components typically found in a Minnesota purchase agreement:

  • Identification of Purchasers: The agreement begins by identifying the parties purchasing the home
  • Description of Property: A detailed description of the property being sold is provided, including the legal description, address, parcel number, and any other relevant details that accurately identify the property.
  • Purchase Price and Financing Terms: The purchase price of the property is specified, along with the amount of earnest money deposit that the buyer is required to submit with the offer. The agreement also outlines the buyer’s financing terms, including whether the purchase is contingent upon obtaining a mortgage and the type of financing being used.
  • Contingencies: Contingencies are conditions that must be met for the sale to proceed. Common contingencies include a home inspection, appraisal, and financing approval. The agreement will specify the deadline for completing these contingencies and the consequences if they are not satisfied.
  • Closing and Possession Date: The agreement establishes the closing date, which is the date when the final transfer of ownership occurs and the buyer takes possession of the property.
  • Prorations and Adjustments: The agreement addresses prorations and adjustments for items such as property taxes, homeowners association dues, and utilities. These adjustments ensure that both parties pay their fair share of expenses related to the property.
  • Seller’s Disclosures: Sellers are typically required to provide disclosures regarding the property’s condition, including any known defects or issues. Buyers have the opportunity to review these disclosures and may negotiate repairs or credits based on the information provided.
  • Closing Costs and Expenses: The agreement outlines which party is responsible for paying various closing costs and expenses, such as title insurance, recording fees, and attorney fees. These costs are typically negotiable between the buyer and seller.
  • Additional Terms and Conditions: The purchase agreement may include additional terms and conditions specific to the transaction, such as the inclusion of personal property, repair credits, or special provisions requested by either party.
  • Signatures: Once all terms have been agreed upon, the purchase agreement is signed and dated by both the buyer and seller, as well as any real estate agents or attorneys representing them. It is not an accepted contract until all parties have signed.

It’s important for both buyers and sellers to carefully review and understand all the terms and conditions outlined in the purchase agreement before signing. Consulting with a real estate professional can help ensure that your interests are protected throughout the transaction process. Additionally, real estate transactions in Minnesota are subject to state laws and regulations, so it’s advisable to work with professionals familiar with local practices and requirements. That’s where I come in. Prior to signing, we will go over the purchase agreement together to make sure you clearly understand and are happy with the terms and conditions.

If you have questions about purchase agreements or anything else real estate-related, just ask. I am always happy to help!

Ready to become a homeowner? I offer a FREE one-on-one meeting to help you understand the process. Let’s Chat!

Kathy Doucette Real Estate
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