Homeownership rates in the United States currently stand at 67.4%. This is an impressive trend considering the turbulent financial year 2020 has been. The home buying market has remained vibrant, with impressive average home sales in the last month.
If you’re planning to purchase a house soon, it couldn’t be a better time to make this colossal lifetime decision. Today, the home market is awash with bogus home sellers. As such, home purchasers must ensure due diligence before sealing any deal.
Home purchase agreements exist to ensure that you get the best out of your home purchase. Whether you’re working with a trusted real estate broker or not, having at least a simple home purchase agreement is always advisable.
Are you preparing to make an offer for a home purchase soon? This simple guide to a home purchase agreement should come in handy.
What Are Home Purchase Agreements?
Before we delve into what makes a reasonable purchase agreement and its components, let’s focus on the definition of a purchase agreement. A home purchase agreement refers to a binding contract between a property buyer and a seller. The agreement outlines the details of a home sale transaction and specifies the obligations that each party bears.
The buyer proposes the conditions they would wish to be binding on the agreement and then present such conditions to the seller. The house seller can then agree, reject, or negotiate the offer before concluding the purchase.
Components of Home Purchase Agreements
For a home purchase agreement to make sense, specific items should be part of the contract. Here are some of them:
Address and Parties Involved
The purchase agreement should have a clear outline of the parties involved. This means the buyer and the seller and their real identities must be part of the contract. Besides, home purchase agreements must also have a clear outline of the property in question.
The description of the property should include the physical address and any other legal descriptions necessary. This information will help minimize any vagueness in the process of determining the parties and the item at hand.
Price and Terms
A homeownership agreement isn’t complete without a clear indication of the prices and sale terms. The offered price is vital, considering that it guides the seller’s decision to accept or renegotiate the deal. The terms of payment also matter when preparing a sales agreement.
A home sale could be based on a cash down payment and a new mortgage. On the other hand, the payment plan may be an arrangement involving an existing mortgage. In both cases, the information should be clear enough to eliminate any vagueness in the sale process.
As a home buyer, the terms of the payment matter, considering the substantial financial burden of buying property. If you are wondering whether making a large house down payment makes sense, then this article can help you make a more informed decision.
Closing Dates and Costs
When making a home purchase proposal, it’s essential to have a clear stipulation of the anticipated closing date. This allows the seller adequate time to prepare the property for the handover. The information around the closing of the sale also presents ample time for any additional background checks before the final purchase.
The closing costs should appear in clear terms on the home purchase agreement. It’s also critical that both parties agree on who covers each of these costs. The closing costs may vary from one location to the next.
Even so, the division of such costs to both parties should be fair and straightforward. This will eliminate any disagreements.
Home Inspection Clause
Nothing hurts more than realizing days into moving into a newly acquired house that the property has underlying structural flaws. Unless you have a pre-agreement with the seller about the house’s condition, a home inspection clause should be set out in a way that ensures liability on the part of the seller.
This means that you reserve the right to walk out of the purchase agreement if a comprehensive review of the house identifies salient issues that may require immense financial input to repair. The clause seeks to cover you from any surprises related to underlying structural and fixture related matters.
Ultimately, the only accurate indicator that the house has changed hands will be representing of a legitimate title deed. As such, all home purchase agreements must include a confirmation from the seller that a ready title will be available upon closing the purchase process.
The title deed should be from an authorized title company. Such an inclusion gives the buyer the confidence that the process is legitimate. Without a commitment to provide the title, then you should tread carefully when making the offer to purchase the house.
It’s also essential that your home purchase agreement captures other critical components such as the real estate taxes and special assessments. Such inclusions, including homeowner’s association fees, should be part of an attached appendix.
The home purchase agreement should further have a clear description of the structures and fixtures in the house. Such information captures the state of each of the systems. Additionally, it clarifies the condition of the light fixtures, heating and cooling equipment, and any built-in-kitchen appliances.
Having Home Purchase Agreements at Hand Is Vital When Buying Property
The process of buying a house is one of the most momentous periods for any individual. The magnitude of the risk involved can be overwhelming. As such, it’s critical to have your guard up during the entire process.
Having a comprehensive home purchase agreement in line can help you during this process. The best thing about working with such a contractual tool is that it gives you the confidence that you’ll get the best out of the home purchase process.
As long as you include each of these conditions in your home purchase agreements, you’ll be good to go. Further, decide on a home repayment plan that works for you. From there, it will be happy homeownership all the way.
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