Purchase and Sale Agreement Template

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Updated August 10, 2022

A purchase and sale agreement is a contract including the terms and conditions for selling a property in exchange for a specific price. After it is signed, an earnest money deposit is paid by the buyer and is non-refundable if their contingencies are met.

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How to Buy Real Estate (10 steps)

  1. Finding Homes for Sale
  2. Get a Pre-Qualification Letter
  3. Attend Open Houses
  4. Schedule a Private Showing
  5. Write the Purchase Agreement
  6. Review the Seller’s Disclosures
  7. Get the Home Inspected
  8. Obtain Financing
  9. Schedule & Attend the Closing
  10. Record the Deed

1. Finding Homes for Sale

buyer searching for property online on trulia.com

According to the 2017 Profile of Home Buyers and Sellers, the following are the best resources to find a home for sale:

  • the Internet – 51% of home sales the buyer found the property on the internet. The top three (3) websites to find a home are Zillow.comRealtor.com, and Trulia.com respectively.
  • a Real Estate Agent – 30% of home sales that occurred the buyer found the property through the use of a licensed real estate agent. There are about *3 million licensed agents in the USA (*Source). The top three (3) real estate brokerage companies are Century21, Keller Williams, and Sotheby’s International Realty respectively.
  • Other – 29% includes friends and family informing the buyer, seeing a yard sign, and reading the newspaper. It’s best when you are searching for a home to have the mindset of keeping your eyes and ears open at all times.

2. Get a Pre-Qualification Letter

closeup of buyer's pre-qualification letter

Unfortunately, in the world of real estate, a buyer will find that it is much easier to get into residences and get private showings if they have a pre-qualification letter. This is a statement from the bank that shows the buyer is able to obtain financing under their current financial status.

In other words, a pre-qualification letter certifies the buyer is able to afford the property. In most market conditions the buyer will have no problem viewing any home that is for sale.

3. Attending Open Houses

property with open house sign on lawn

An open house is how a buyer “gets a feel” for the market conditions in their area. It is recommended to view houses within their price range. Once an idea of what the buyer is looking for is discovered, the search can be narrowed.

4. Schedule a Private Showing

real estate agent giving buyer a tour of property

This is completed by the buyer or their agent. The seller, or their agent, will be contacted and the parties will meet at a specific time at the residence. Usually, the seller and their agent will leave the premises and give the buyer 15 to 20 minutes to look around the home.

If the buyer likes the home, an offer will be made.

5. Write the Purchase Agreement 

buyer signing purchase agreement

The purchase agreement also acts as the offer letter. The seller will have the choice to accept, reject, or submit a counter-offer. If the seller accepts, the purchase agreement will be signed and the buyer will be required to submit their downpayment (if any).

Step 6 – Review the Seller’s Disclosures

seller handing disclosure forms to buyer

If an agreement is made, the seller will be required to complete and put forth disclosure forms to the buyer. These forms will notify the seller of any issues or repairs needed in the home as well as if there are any hazardous substances on the property.

Step 7 – Get the Home Inspected

buyer inspecting corner of house with flashlight

No matter what the seller tells you, get the residence inspected by a certified inspector in your area. A certified inspector will be someone that will most likely have an understanding of the issues with homes in the area and will be able to articulate any issues on the premises.

  • Find a Certified Inspector (epa.gov) – If the residence was built prior to 1978, it may be worth it to get the property inspected by a lead paint specialist who can tell you if there are any issues with the interior. The main hazard with lead paint is that it can chip and crack over time leaving a powdery-like substance that is extremely toxic, especially to children.

Inspection Tips – It is also best for the buyer to walk around the home and perform their own inspection by:

  • Walking around the home looking for cracks in the foundation;
  • Check the rafters for holes (due to termites) or general rotting;
  • Walk the outside premises after a rainfall; and
  • Pay attention to ceiling details and anything that may show past flooding, leaks, or any repair that is needed.

Step 8 – Obtain Financing

mortgage loan application with stamp of approval

If financing was a condition of the purchase agreement, the buyer will have to go to a local financial institution to apply and secure funding for their home. This is commonly known as a “mortgage” and depending on market conditions may require up to 20% for a down payment along with other financial commitments.

Appraisal – When obtaining financing, a professional known as an “appraiser” will be required to justify the price the buyer is paying. This will give the financial institution providing financing the comfort and security they need in the chance the buyer can no longer afford the mortgage payment.

Once financing is finalized the closing may be scheduled.

Step 9 – Schedule & Attend the Closing

respective parties signing purchase and sale agreement at closing

Scheduling the closing will need to be done with a local title company. The title company will pull the deed and conduct a deed search and ensure that ownership to the buyer is legally feasible. All documents and attorneys will be coordinated with the title company and after all the due diligence is completed the closing will be scheduled.

At the closing, all documents, disclosures, and funds will be transferred to the respective parties. This may sound simple but a typical closing can last from a couple to several hours depending on the complexity of the property. After the closing has concluded, a deed with the buyer’s name will be produced.

Step 10 – Record the Deed

buyer reviewing deed

The deed is the legal title to the property which states who is the owner. This will usually be signed at the closing, as a notary public is required in most states, and afterward can be filed at the Registry of Deeds in the county where the property is located.

Transfer Taxes – If there is a real estate transfer tax, this is usually paid at the time of recording the deed. If payment for the transfer taxes was to be split by the buyer and seller, which is common, the payment should have been made at the closing.

After the deed has been filed with the county recorder the sale is complete.

Disclosures

A disclosure is a statement or attachment to a purchase agreement that reveals information about the property. A disclosure form is usually mentioned if required by local, state, or federal law.

  • Lead-Based Paint Disclosure – Federal law requires the owner of a property constructed prior to 1978 to identify if there has been any chipping, peeling, or deteriorating paint on the premises. Due to the paint particles being hazardous to a person’s health, this is a required disclosure to be attached to any purchase agreement.
  • Property Disclosure Statement – Required in every State, although, if the State is considered “Buyer Beware” the seller is not legally liable for the information provided.

Addendums

An addendum is commonly attached to a purchase agreement to detail a contingency that is in the agreement. A contingency is a condition that must be met or else the terms of the entire agreement may not be valid. Below are the most common conditions that are mentioned in purchase agreements.

Buyer Beware

Buyer beware, or “caveat emptor”, is a term used when the laws in the State do not require the seller to mention the material defects on the property. Therefore, the buyer is purchasing the property on an “as-is” basis.

The following States are considered buyer beware: Alabama, Arkansas, Colorado, Florida, Indiana, Massachusetts, Missouri, Montana, New Hampshire, New Jersey, Virginia, West Virginia, and Wyoming.

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How to Write

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I. The Parties

(1) Date Of Purchase Agreement Effect. Section I will require that several basic facts are established regarding this paperwork beginning with the exact date when it becomes an effective and binding document. To this end, produce the calendar date of this day on the first blank line. Be aware that the effective date may not be earlier than the latest signature date reported during the execution of this paperwork.

(2) Buyer. Document the full name of the Real Estate Buyer in the first area that continues the statement made by Section I. In many cases, the Buyer will be a Private Party (i.e. a Single Adult or a Family) however if it is a formally registered Business, then the Entity’s current legal name (as recognized by the State where it formed) must be documented. If there is more than one Buyer of the residential real estate make sure that each one is identified clearly in this section.

(3) Address Of Residential Real Estate Buyer. The mailing address where any further communication or notices dealing with this purchase may be sent to each Real Estate Buyer named should be submitted to complete the “Buyer” area.

(4) Seller. The Seller of the residential real estate of concern should be identified with his or her name. As with the Buyer, if the Seller of the residential property is a Business then the full name of the Entity selling residential property should be recorded including its status suffix or any abbreviations considered part of its legal name. Make sure to identify each Real Estate Seller in this area.

(5) Address Of Seller. The complete address where the Real Estate Seller(s) can reliably receive further documentation regarding this agreement and the concerned sale should be submitted to the second blank line of the “Seller” section.

II. Legal Description

Select One Statement From Item 6 Or Select And Complete Item 7

(6) Type Of Structure. The structure where the residential property being sold is located will require definition in the Second Section. A comprehensive list of the basic structures where residential property is often found is displayed in Section II. The type of structure defined by the residential property’s legal description must be selected from this list. Therefore, if the residential property is defined as a “Single-Family Home” in its legal description, then the first checkbox should be selected. If not, then define the residential property as a “Condominium,” “Planned Unit Development (PUD),” “Duplex,” “Triplex,” or “Fourplex” by selecting the appropriate checkbox.

(7) Other Type Of Structure. Since it is crucial that the residential property is categorized exactly as it is in the legal description held by the State for this property, any type of structure not defined by the choices above will need to be reported directly to this list. Therefore, if the structure where the residential property is located is not correctly defined above, select the “Other” option. Once done, transcribe the type of structure the residential property’s legal description lists for this real estate onto the blank space displayed.

(8) Street Address. The residential property’s geographical location must be presented in Section II. Furnish the building number, street, unit number, city, county, state, and zip code of the residential property’s physical address in the area reserved for this information in the Second Section.

(9) Tax Parcel Information. Continue identifying this property by furnishing the tax parcel or land information for the residential property as it is recorded with the State.

(10) Other Description. If the descriptions in Section II are not found in the property’s deed or do not apply to the residential property being sold then, select “Other” making sure to use the space that follows to properly classify the residential property. For instance, there may be a significant landmark on the property or it may have a unique amenity.

III. Personal Property

(11) Additional (Personal) Property. If the real property being purchased will include any of the Seller’s personal property (i.e. a washing machine, mulcher, outdoor pool, etc.) then identify each such personal item of the Seller included with this sale in Section III. This report should provide the information needed to locate and identify the personal property (i.e. serial number, service contract, physical description) the Seller will include with this sale.

(12) Verifying Each Page. Once the appropriate information has been supplied to the areas requesting completion on each page, it will be expected that the Residential Property Seller and the Residential Property Buyer will prove that each has reviewed the information submitted to that page by submitting their initials where requested. This review and initial approval must be performed for each page by each Signature Party beginning with the first page before the execution of this document.

IV. Earnest Money

(13) Earnest Money Amount.The payment that the Real Property Buyer must submit before the closing and will be applied as a credit to the closing cost at the time of closing must be defined. Produce the dollar amount of the earnest money payment that the Real Estate Seller requires in order for this agreement to remain effective.

(14) Payment Deadline. Define the final date when the earnest money must be received by the Real Estate Seller across the two lines available.

(15) Time Of Deadline. In addition to the date, the time of day when the earnest money must be received by the Seller should be documented in Section IV. Select either “AM” or “PM” from the choices provided to help define what part of the day this money is due.

Select Item 16 Or select Item 17

(16) Trust Or Escrow Requirement. Locate the second paragraph of Section IV. If the earnest money must be held in escrow or (alternatively) in a trust until the completion or termination of this sale, then select the checkbox attached to the word “Is.”

(17) No Trust Or Escrow Requirement. If the Seller will not be required to entrust the earnest money to an Escrow Agent, hold it in a trust, or in a separate account then the “Is Not” checkbox must be selected.

V. Purchase Price & Terms

(18) Purchase Price. The full cost of the residential property being sold should be supplied to Section V. Two distinct areas are presented to define this amount. The first space requires this amount to be written out while the second space requests a numerical presentation of this figure.

Select And Complete Item 19 Or Item 21 Or Item 30

(19) All Cash Offer. If the Real Estate Buyer does not require financing for the purchase of the residential property then select the “All Cash Offer” checkbox from Section V.

(20) All Cash Deadline. The calendar date and the time of day on that date when the Buyer must present the Seller with written (and legal) proof of his or her access to the funds needed for this sale or risk the termination of this agreement should be documented in the spaces provided by the “All Cash Offer” definition.

(21) Bank Financing. If the Real Estate Buyer must obtain bank financing in order to complete this purchase then the second checkbox of Section V should be selected. This will require additional information to define the type of loan the Buyer must obtain. If this type of financing will be involved then this statement shall require further definition of the type of loan the Buyer will attain. Utilize the next area to present this information.

Select Item 22 Or Item 23 Or Item 24 Or Item 25 To Complete Item 21

(22) Conventional Loan. If a conventional loan was secured from a bank or similar financial institution by the Real Estate Buyer for the purpose of completing this purchase, then mark the “Conventional Loan” checkbox.

(23) FHA Loan. If the Buyer obtained a loan from the Federal Housing Administration then place a mark in the second checkbox (of this option) and furnish an attachment consisting of proof that this loan was acquired or will be approved.

(24) VA Loan. If the Buyer must secure a loan from the Veterans Association, then the “VA Loan” checkbox must be selected from this list. An attachment proving the status of this loan should be made and affixed to this document if this is the case.

(25) Other. If the financing for the residential property sale that was obtained by the Buyer cannot be defined above, then select “Other.” Make sure to define the exact loan or the nature of the financing, the financed or loaned amount, and to provide proof that this loan was obtained by the Buyer as an attachment.

(26) Deadline For Proof Of Funds. The first spaces in Statement (C) of this section should be used to record the deadline for presenting proof of the Buyer’s ability to uphold and complete the financial requirements of this purchase in the form of a letter from an acceptable financial institution.

Select Item 27 Or Select Item 28

(27) Proof Of Funds Or Financing Required. If this agreement will terminate upon the Buyer’s inability to provide proof of his or her financial capability from a financial institution then the first checkbox in Statement C must be selected

(28) No Proof Of Funds Or Financing Required. If the Buyer’s inability to obtain a letter from a Financial Institution that proves his or her ability to complete this purchase will not affect the status of this agreement then the second checkbox in Statement (C) should be marked.

(29) Termination For Lack Of Proof. If the Seller does intend to terminate the agreement should the Buyer be unable to prove that he or she can reliably close this sale, then the maximum number of days from the failure to provide this proof when the Seller may opt to terminate the sale must be recorded in Statement (D).

(30) Seller Financing. If the Seller of the real estate will finance the Buyer’s effort in purchasing the real property behind this paperwork, then mark the “Seller-Financing” checkbox. This source of financing will also necessitate some additional information. Use the area this statement provides to record the details of the conditions that the Seller shall place on the Buyer when repaying the loaned amount.

(31) Loan Amount. The amount of money that shall be loaned to the Buyer by the Real Estate Seller for the purpose of completing the sale of the defined real property must be documented in Statement (A) of “Seller-Financing” option for Section V.

(32) Down Payment. In the majority of cases, the Seller will require that a “Down Payment” is made on the repayment of a loan. If so, then produce the exact dollar amount the “Down Payment” required must consist of.

(33) Interest Rate. The “Interest Rate” that shall be calculated and applied as a per annum rate should be furnished to the space provided in Statement (C).

(34) Term. The number of months or the number of years given to the Real Estate Buyer to repay the loan made by the Seller should be documented in Statement (D). Report this number on the blank one provided then select either the checkbox “Months” or  the checkbox “Years” to define this time period accurately.

(35) Documenting Buyer Ability. Statement (E) requires that the final date when the Buyer must submit proof of his or her ability to repay the loan be documented across the first two lines and that the final date given for the Seller to approve this paperwork for the purpose of approving the Buyer’s loan request to pay for the real property is also documented.

VI. Sale Of Another Property

Select Item 36 Or Select And Complete Item 37

(36) Sale Of Other Property Not Required. If the closing of this sale does not depend upon the Buyer’s ability to sell a different property (such as his or her home) then select the “Shall Not” statement’s checkbox in Section VI.

(37) Sale Of Other Property Required. If this agreement’s sale can only conclude when the Buyer sells a different property, then mark the checkbox labeled “Shall Be.” Once this selection is made, continue through the statement since some information will be required.

(38) Details Of The Buyer’s Property Sale. When the Buyer must sell a property in order to proceed, some additional information will be required to define how this action will relate to the property sale this offer concerns. Therefore, the physical address of the property the Buyer must sell is required by  the first blank line available while the number of days after this agreement’s effective date when the sale of the Buyer’s property must be finalized (or closed) will be required by the space that follows.

VII. Closing Costs

Select Item 39 Or Select Item 40 Or Select Item 41

(39) Buyer Obligation. If the Real Estate Buyer will be expected to pay for all costs of closing then the “Buyer” checkbox in Section VII must be marked.

(40) Responsibility Of Seller. If this agreement shall obligate the Real Estate Seller to assume the closing costs for both of these parties, then select the second checkbox from Section VII.

(41) Both Parties. If each Party shall be responsible for their respective costs of closing then select the third checkbox from Section VII.

IX. Closing Date

(42) Date Of Closing. Submit the calendar date and the time of day of the property sale’s closing using the spaces available in Section IX and by selecting either “AM” or “PM” to better define the reported time of the closing. This will be considered the last calendar date when the closing under the conditions in this agreement may complete.

X. Survey

(43) Survey Cost Responsibility. Naturally many Real Estate Buyers will prefer to have a formal survey conducted on the property to ensure the physical boundaries and safety of the property. Section X allows for this but requires that the cost of such a property survey be paid for by the Buyer before the closing. Record the number of days before the closing when the cost of the survey must be successfully paid by the Buyer.

(44) Remedying Defects. If there are any “Survey Problems” found that prevent the Buyer from closing then it will be up to the Seller to produce a solution. Document the number of days before the closing of this property sale when a solution to a survey problem must be found so that the discussed transaction may proceed to satisfy the expectations of the Buyer and Seller.

XII. Title

(45) Title Determination Deadline. The Real Estate Seller must run a title report on the property where any problematic results are then reported to the Buyer. The maximum number of days given to the Seller after receiving such a title report must be documented in Section XII.

(46) Curing Issues With Title. Record the number of days after the Buyer informs the Seller that a problem in the title report is objectionable and must be corrected by the Seller on the blank line provided.

XIII. Property Condition

(47) Buyer Inspection Period. This agreement allows the Real Estate Buyer to receive and retain the right to hire licensed professionals to investigate the property’s condition for the life span of this agreement until the date and time (that must be) reported on the first set of lines in Section XIII comes to pass.

(48) Inspection Determination. Document the latest date when the Real Estate Buyer must inform the Seller of defects found as a result of his or her commissioned inspection(s) that must be remedied or repaired in order to proceed on the second set of lines in Section XIII. Bear in mind, once this date elapses it will be assumed that the result of any professional survey yielded no problems or defects..

(49) Renegotiating Property Problems. The number of days given to the Buyer and Seller to renegotiate the closing after the Seller has been informed that it may not proceed must be documented in the last line in Section XIII.

XV. Appraisal

Select Item 50 Or Select And Complete Item 51

(50) No Appraisal Requirement. If this agreement does not call for a formal appraisal of the residential property being sold then the statement “Shall Not” (found in Section XV) should be selected with a mark to its corresponding checkbox.

(51) Appraisal Requirement. If this agreement should call for a formal appraisal of the property then the “Shall” statement in Section XV must be selected and the maximum number of days given after the appraisal results are received to renegotiate the agreement (if necessary) should be documented where requested.

XVII. Termination

(52) Termination Earnest Money Deadline. As mentioned, the possibility of this agreement’s termination may occur. The Twenty-Eighth Section of this agreement will seek to address this scenario. Record the maximum number of days after the decision to terminate when the earnest money must be returned to the Buyer on the space attached the words “Business Days.

XXIV. Governing Law

(53) State. Name the jurisdiction that shall govern and, if needed, enforce the conditions of this agreement for the terms in this paperwork by identifying the State this sale is effective in Section XXIV.

XXVIII. Offer Expiration

(54) Deadline For Execution. This offer may not exist indefinitely since this may interfere with the goals of one or both Parties . Therefore the Seller must provide a response by delivering a signed copy of this offer no later than a certain date. This deadline should be submitted in Section XXVIII as a record of the latest date and time when this agreement may be signed by the Real Estate Seller.

XXXI. Disclosures

Select Item 55 Or Select And Complete Item 56

(55) No Additional Addendums Or Disclosures. If this agreement should be considered complete with no addendums or disclosures attached, then the first checkbox statement of Section XXXI must be selected.

(56) Addendums And Disclosures Made. If this agreement will include disclosures and/or addendums then the second statement of Section XXXI must be selected. Naturally, this will require that each such document is properly identified using the areas that follow. It is imperative that any such paperwork is discussed further using the area provided by this statement.

(57) Lead-Based Disclosure Form. Every disclosure or addendum that is included in this agreement must be established as such in Section XXXI. Therefore, if a “Lead-Based Paint Disclosure Form” must be presented with this agreement for signing, then select the appropriately labeled checkbox from Section XXXI to indicate that the presence of the “Lead-Based Disclosure Form” is a required attachment by the time this paperwork is signed by either Party.

(58) Addendums And Disclosures. If any other addendums or disclosures will be included, then document the addendum or disclosure’s title on a unique blank line in Section XXXI and select the corresponding checkbox.

XXXII. Additional Terms And Conditions

(59) Terms And Conditions To Include. The Real Estate Buyer and Seller may require that provisions not found in the sections this paperwork presents above to be included. If so, all such additions to the conditions this agreement imposes upon and expects of its Participants (the Buyer and the Seller of the Real Estate) may be furnished to Section XXXII. This section is optional but should be utilized when needed since only the conditions and the terms that physically appear in or are attached to this agreement will be considered a part of it when this paperwork is executed.

XXXIV. Execution

(60) Buyer Signature. In order for the Real Estate Buyer to accept this offer, he or she must sign the “Buyer Signature” line in Section XXXIV. Once this signature is submitted he or she must print his or her name then produce a record of the current calendar date. Notice, that two “Buyer Signature” areas are provided. If there is more than one Buyer, then each one will need to complete the signature requirements of this document. In fact, if there are more than two Buyers, make sure to copy and insert the appropriate number of “Buyer Signature” area needed for each Buyer to sign this document properly.

(61) Seller Signature. Each Real Estate Seller may only make this offer by signing the “Seller Signature” line, printing his or her name as requested, and submitting the formal date of the Seller’s signing. Two areas for this has been included however, more signature areas may be inserted if there are more than two Real Estate Sellers.

(62) Agent Signature. In many residential property purchases, an Agent will aid in brokering the deal. In such instances, the Agent must sign and print his or her name in the final signature area of this document then submit the date of signature where requested. Each Agent who has brokered this deal must satisfy the signature requirements of this document by signing and printing his or her name as well as documenting the date of these actions.

How to Terminate a Purchase Agreement

Unless the buyer or seller breaches or fails to perform under the purchase agreement, it cannot be canceled unless both buyer and seller agree. Most purchase agreements are canceled due to the following:

  • Failure to Pay a Deposit
  • Material Defects (found during building inspection)
  • Cancellation during the Contingency Period
  • Failure to Obtain Financing
  • Mutual Agreement

Notice to Terminate a Purchase Agreement

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