Free Real Estate Purchase Agreement Form

Purchase agreement addendums are documents you attach to the agreement to add details the original left out. An addendum can also override a clause in the original without crossing anything out of it.

What a Real Estate Purchase Agreement Covers

A real estate purchase agreement is a written contract between a buyer and a seller of property. It records the price and the closing date, and it lists the conditions both sides must meet before the sale goes through. Once both parties sign, it becomes the main contract for the deal.

A purchase agreement usually covers these points.

• The names of the buyer and the seller, and the property being sold.
• The purchase price and the earnest money deposit.
• Contingencies, such as financing, inspection and appraisal.
• The closing date, the closing costs and who pays them.
• Items that stay with the home and items the seller keeps.
• What happens if either side defaults.

The exact sections vary by state and by form. Read the whole contract, and ask a local attorney or agent if a term is unclear.

How to Purchase Real Estate?

Buying a home takes time, patience and a few formal steps. Here are the seven steps most home buyers follow when they purchase a residential property. Each step builds on the one before it, so it helps to read them in order.

1. Look for a home or apartment for sale

You can find homes for sale in a few common ways.

1. Through a real estate agent. An agent is a licensed professional who represents buyers or sellers in negotiations. Ask friends or relatives who had a good experience with one.
2. Through property websites such as Zillow and Realtor. They show many listings in one place, with the key details of each home.
3. Through neighbors or people you know who plan to sell.
4. Through listings in local newspapers and magazines.

2. Get a pre-qualification letter

If you need a mortgage, a pre-qualification letter can strengthen your offer. A bank issues it to show that you may be able to get financing from that lender. Sellers often take such offers more seriously.

3. Find the right real estate agent

A good agent knows the local area and the buying process, and can share information that is hard to find on your own. Agents also negotiate for you. Many buyers use one to be sure they see the best options nearby.

In many deals the seller pays the agent's commission, but the fee is often built into the price of the home. Ask every agent how they are paid before you sign anything.

4. Get private showings

Once you know your price range, arrange to visit homes in person. You or your agent can schedule the visits. Buyers usually get some time to look at a home before they decide to make an offer.

5. Craft a real estate purchase agreement and sign it with the seller

This is where you put your offer in writing. You draft the purchase agreement and send it to the seller, who can accept or reject it. Once both sides sign, its terms apply to both of you.

One of the buyer's first duties is usually to pay the deposit the parties agreed on.

6. Check the disclosures

Around the time you sign the purchase agreement, the seller should give you the disclosures that federal and state rules require. They tell you about known hazards or needed repairs. The timing varies by state.

Federal law requires sellers of homes built before 1978 to give the buyer a lead-based paint pamphlet and to disclose any known lead paint hazards. Old paint can crack over time and leave toxic dust that children can easily pick up.

If you paid an earnest money deposit, it is good practice to get a written receipt for it. The receipt documents the payment if a dispute comes up later.

Sellers in many states also fill out a property disclosure statement. It lists the physical problems and defects the seller knows about. It does not cover defects the seller does not know about.

7. Invite an inspector

Have a professional inspector check the home before closing. Inspectors know which defects are common in homes. If you work with an agent, they can help you book the inspection soon after the seller accepts your offer.

Both sides usually receive the inspection report. If it shows serious damage or items that need repair, you may be able to renegotiate the price or ask the seller to fix them. An inspection contingency in the contract can also let you withdraw and get your earnest money back. Many buyers do a final walk-through before closing to confirm that the repairs were done.

What 'Caveat Emptor' Means

Caveat emptor is a Latin phrase that means "let the buyer beware." Under this principle, a buyer is expected to check goods thoroughly before buying them. If the buyer finds a defect afterward, the seller is generally not liable for it.

In real estate, caveat emptor means the buyer takes the property "as is" and is responsible for inspecting it. The buyer usually has little recourse for problems found after closing. Most states now require the seller to give the buyer a written disclosure of known defects.

Real Estate Purchase Agreements Laws by State

The right column shows whether a state is "caveat emptor," where the buyer carries most of the risk of hidden defects. Most states covered here now require the seller to give a written disclosure of known defects. The rules change, and many cells have exceptions. Check the page for your state before you rely on any cell.

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How to Fill Out a Real Estate Purchase Agreement

A residential purchase agreement holds a lot of detail about the property, the parties and the terms of the sale. The steps below follow the order most agreements use. Proofread every entry before you sign, since the layout of your form may differ.

1. Name the buyer and the seller, and enter the effective date of the agreement.
2. Give the property's address, type (for example a single-family home or condominium) and legal description. Add the tax parcel number if the form asks for it.
3. Describe any personal property sold with the home and say which fixtures and appliances stay. Leave room for items the seller will keep.
4. Write the purchase price in both numbers and words.
5. State the earnest money deposit amount and its due date. Say who holds the money, such as a trust or escrow account, and see the earnest money addendum for added terms.
6. Say whether the sale depends on the buyer getting a loan or selling another home. If it does, set a reasonable financing deadline and consider a third-party financing addendum for the details.
7. Give the buyer the right to inspect the property, and to order an appraisal and a survey, before closing. Say who pays for each and the date by which the buyer must report problems.
8. Say how the title will be transferred and how many days the buyer has to object to the title report. Add how long the seller has to fix objections, and how closing costs are split.
9. Set the closing date and place, and say that the buyer takes possession at closing. Add the final walk-through window and require the home to be left free of tenants, the seller's belongings and trash.
10. Say that the seller will keep the property in its current condition until closing, and what happens if it is damaged before then. Attach the required seller disclosures, such as the federal lead-based paint disclosure for homes built before 1978.
11. Explain what counts as a default by each party and what happens to the deposit. Add how the agreement can be cancelled, how disputes are resolved and which state's law governs.
12. Check the closing provisions, such as when the offer expires and what counts as acceptance. Finish with the signatures, printed names and dates of both parties.

To build an agreement with these sections, use the document builder at the top of this page.

Common Purchase Agreement Mistakes

Most disputes over a purchase agreement start with missing or unclear details, not bad intent. A few habits can help you avoid trouble before closing. Review this list before you sign, and compare it with the terms in your own agreement.

• Leaving blanks. Fill in every field or write "N/A," so that nobody can add terms later.
• Skipping the inspection. Without one, you may take on defects you could have found.
• Missing a deadline. Financing, inspection and closing each have a date, and a closing date extension can record a new one if both sides agree.
• Ignoring the disclosures. Read what the seller discloses, and read the lead-based paint pamphlet if the home was built before 1978.
• Relying on a spoken promise. Put every agreed repair in writing, for example in a repair escrow addendum.
• Losing the paper trail. Keep a written receipt for the earnest money and for any other payment.

What Happens at Closing and Possession

Closing is the step where the title passes to the buyer and the buyer pays the remaining funds. The contract sets the closing date and place, and it says when the buyer takes possession. Most buyers also do a final walk-through shortly before closing.

At or before closing, expect these items.

• The buyer pays the rest of the price and the closing costs, often through an escrow agent or a title company.
• The seller delivers the deed, which transfers the title to the buyer.
• Property taxes and similar charges for the year are often prorated as of the closing date.
• The buyer receives the keys, and possession passes on the terms the contract sets.
• Any required disclosures and receipts go into the closing file.

If the seller needs more time to move out, both sides can agree on a later possession date in writing. A spoken promise is hard to prove, so add the new date to the contract.

Earnest Money and Backing Out of a Deal

Earnest money is a deposit the buyer pays to show good faith after the seller accepts an offer. An escrow agent or a title company usually holds it, and it is typically credited toward the price at closing. The amount and the refund terms are set in your agreement.

A buyer can often withdraw when a contingency is not met, such as a failed inspection or a denied loan. Backing out without such a reason may cost the buyer the deposit. Read the cancellation terms in your agreement before you sign.

Addendums, Financing and Closing Costs

The purchase agreement sets the main terms of the sale. An addendum is a separate document that adds or changes terms, such as an appraisal contingency. Both sides sign it so that it becomes part of the contract.

Closing costs depend on the agreement and on local custom. Buyers and sellers often split some costs, and the agreement should say who pays which. Your lender or closing agent can give you an estimate before the closing date.

In some deals the seller lends part of the price instead of a bank. The terms go into a document such as an owner financing addendum. Both sides should review the payment schedule and what happens if a payment is missed.

General information, not legal or tax advice.

Jennifer M. Settles

Author & Attorney

With over 25 years of experience as a business and transactional attorney, Jennifer has mastered the craft of closing highly successful deals for her clients. Through her wide-ranging expertise in commercial contracts, real estate transactions, M&A and corporate law, Jennifer secures results that are second-to-none.