Do you know what a Purchase and Sale Agreement is? It’s the document that contains the terms of the sale of your home. This blog will go through the components of a P&S Agreement so that you understand it.
8 Main Components of a Purchase & Sale Agreement That You Need to Know
- Address of the home and names of the buyer and seller
- Price of the home and terms of sale
- Closing date and closing costs
- Real estate taxes and assessments
- Items conveying with the sale
- Information to disclose about the property
Now we’ll look at each of these components more closely.
Address of the Home and Names of the Buyer and Seller
Besides the property address, this section contains the legal description of the property. The buyer’s and seller’s name are also stated here.
Price of the Home and Terms of Sale
This section contains the agreed-upon price of the home and method of payment, such as all-cash, new mortgage, down payment amounts, etc. An earnest-money requirement is stated here. Mention is made of the buyer’s lending arrangements.
Closing Date and Closing Costs
The Purchase and Sale Agreement contains the closing date of the sale plus stipulations regarding changing the date of the closing. At closing, possession of the home transfers from the seller to the buyer, and the title of the property is also conveyed to the buyer.
This section states which party is paying the closing costs, or if the parties are splitting the costs (the split is stated).
Real Estate Taxes and Assessments
This section of the document outlines financial obligations associated with the home including homeowner association (HOA) fees, maintenance fees, fuel, property taxes, and special assessments.
Items Conveying with the Sale
“Conveying” means included in the sale. The Purchase and Sale Agreement lists things that the seller will leave in the house for the buyer. Conveyed items can include things like garage shelving, kitchen appliances, special light fixtures, patio furniture, and the like. Often when buyers are being showed a home, they later ask for particular items to convey. All these should be included in the Purchase and Sale Agreement.
Information to Disclose About the Property
Anything on the seller’s property that impacts its value or integrity must be disclosed in the Purchase and Sale Agreement. Not making defects known is illegal in most states.
Disclose the presence of water well problems, lead paint, methamphetamine, termite damage, and radon gas.
Contingencies mean conditions to be met before the property sale is completed. Common contingencies include the property appraising at a certain value, the property passing inspections, or the buyer selling their home first.
Wrapping It Up
Understand the elements of a Purchase and Sale Agreement so that the sale and closing process go smoothly.
When selling a home to a homebuying company or investor, the Purchase and Sale Agreement will be simpler than when selling through a realtor with lenders, appraisals, and mortgages involved. Questions? Call Locklear Offers at (904) 574-4060.