5 important terms in your purchase and sale agreement that you should know
Purchasing a home is an exhilarating yet potentially overwhelming experience, as it involves navigating a web of legal documentation, financial intricacies, and administrative procedures. Throughout this process, you're likely to encounter terminology that may seem perplexing. To help ease your journey into homeownership, we've compiled a list of five crucial terms that every prospective buyer should familiarize themselves with. Please bear in mind that the terminology and practices related to purchase and sale agreements may vary depending on your region.
Closing Date (or Completion Date): The closing date marks the official transfer of property ownership to the buyer and signifies the completion of all necessary legal and financial aspects of the transaction. Typically occurring a few days before the closing date, the buyer signs essential documents, such as the mortgage loan and property title papers, and provides the required funds for the remaining down payment and closing costs. Often, the closing date aligns with the possession date, which is when the new owner receives the keys to their new home.
Deposit: When submitting an offer, buyers include a deposit, usually a percentage of the total property purchase price. While the standard deposit amount is approximately 5% in many markets, this can vary depending on local conditions. The deposit demonstrates the buyer's genuine intention to make the purchase and is handed over to the seller's real estate brokerage upon offer acceptance. It is held in trust until the closing date and is applied to the total purchase price.
Irrevocable Date and Time: When making an offer to purchase a property, there is a limited timeframe during which the offer remains valid. This period is referred to as the irrevocable date and time. By this specific date and time, both the buyer and the seller must either accept or decline the offer; otherwise, it becomes null and void. The duration of the irrevocable period can vary depending on the urgency of the transaction and the time needed for the parties to review the offer's contents, ranging from a few hours to 48-72 hours from the time of offer submission.
Chattels and Fixtures: To determine what is included in the sale of a home, including items like curtain rods, kitchen appliances, or garage door openers, refer to the chattels and fixtures section of the purchase and sale agreement. Chattels are removable items, such as curtains, kitchen appliances, and the washer and dryer. Fixtures are permanently attached to the property, such as built-in appliances, cabinets, security systems, or built-in dishwashers. When drafting an offer, it's crucial to specify which items you want included in the sale, as it's assumed that the previous owner will take any chattels unless stated otherwise. Sellers should also clarify what items are not included in their home's listing description to avoid disputes.
Clauses and Conditions: Each purchase and sale agreement includes a set of assurances that the buyer and seller sign off on, known as clauses. These clauses are important but typically not deal-breakers if unfulfilled. For example, a clause may state that the seller must leave the property in a clean condition upon vacating or confirm that the appliances are in working order. In contrast, conditions are optional clauses that must be satisfied within a specified timeframe for the home sale to proceed. For instance, a sale can be contingent upon a professional inspection of the property within five business days of offer acceptance. It's advisable to review any unfamiliar terminology in your purchase agreement with your sales representative to ensure a smooth transaction.
These key terms are your roadmap to a smoother home-buying experience, ensuring you make informed decisions throughout the process. However, the intricacies of real estate transactions can vary from one location to another, so don't hesitate to reach out to a trusted real estate professional in your area for personalized guidance.
Now that you're equipped with this knowledge, it's time to embark on your home-buying journey with confidence. Start by reviewing your local real estate market, connecting with a qualified agent, and exploring potential properties. Remember, your dream home may be just around the corner!
If you have any more questions or need further assistance, feel free to get in touch with us to guide you through the specifics of your unique home-buying journey. Happy house hunting!