Once you have found an interested buyer for your home, it is imperative that all parties enter into a written purchase agreement. A properly drafted real estate purchase agreement, (also referred to as an earnest money contract), is a legally binding contract which cannot be changed without the agreement of both parties. While there is no “standard” form, there are several common forms in use. There are also a number of additional documents commonly known as addendums that are used in conjunction with a purchase agreement.

Certain provisions in standard offers often favor one party over the other. Both the Seller and the Buyer are legally obligated to act in the manner outlined in the contract from the time it is signed until the closing and sometimes even after the closing!

Before signing a purchase agreement, make sure it correctly expresses your agreement on such important details as the sales price, method of payment, closing and possession date and which items of personal property are to be sold with the home. Upon signing a purchase agreement, the buyer typically gives earnest money. Earnest money is a deposit that the Buyer gives to the Seller as a good faith commitment to purchase the property from the Seller. Most Buyers will prefer that the earnest money check be deposited in a trust account until closing. Often times contingencies are added to a purchase agreement. Contingencies are conditions that must be met prior to the closing taking place. Often times if these contingencies are not fulfilled by a specified date, the Buyer will receive their earnest money back. Also, once a purchase agreement is signed, it is a legally binding contract.

Because the legal contracts and other paperwork involved in selling a home are complex, many people prefer to work with a real estate attorney. A real estate attorney can either draft or review a purchase agreement for you so that you understand all your rights and responsibilities before signing it. An experienced real estate attorney will make certain that the purchase agreement includes all the important terms and conditions of the sale.

Closing the Sale

The real estate "closing" is a meeting at which the parties to the transaction complete the sale in accordance with terms of the purchase agreement. It is sometimes referred to as settlement or closing of escrow.

Typically, when you sell your home, the buyer will choose a title company to handle their closing. You, as the seller, may chose to have your attorney or your own independent closing company handle your closing. Besides being independent, choosing your own closing company may save you time and money.

Prior to closing, either your Abstract of Title must be updated or a Registered Property Abstract (R.P.A.) must be prepared to allow the title company to examine and insure the title against any liens or title defects.

Arrangements should be made to have utility meters read as of the possession date and have final bills forwarded to the Sellers new address.

At the closing you will sign a new Deed transferring your ownership interest in the property to the buyer, an Affidavit stating where you are employed and your addresses for the past ten years and a Bill of Sale transferring your interest in any personal property that you are selling to the Buyer. Also, a Certificate of Real Estate Value (C.R.V.) will be prepared.

Any loans on the property will be paid off by the title company at closing. Once these loans are paid off, the mortgage company will issue a mortgage satisfaction. Upon receipt by the title company, the mortgage satisfaction will be recorded with the county.

Also, any other expenses relating to the sale of your property will be paid off at the closing. You will receive copies of everything you signed and a proceeds check will be issued to you.

The closing concludes the sale. At this time keys and garage door openers should be transferred to the Buyer. Once the closing is completed, the Buyer expects to have the right to occupy the home unless there is a specific agreement stating otherwise.

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