Speaker 1: Selling your real estate property is no walk in the park, but it does not need to be nearly as difficult as most people make it out to be. Sure, there are a lot of forms and documents that are required, but even with so many factors to consider, a real estate purchase agreement can be made easy with the right assistance. As long as the buyer and seller agree, the process should be smooth if all the required parameters are met. If you're feeling weighed down by the requirements of your real estate purchase agreement, you're in the right place. DoorLoop is your one-stop shop for all things real estate. In this video, we'll go over all you need to know about a real estate purchase contract. A real estate purchase agreement is a legally binding contract that outlines all the terms and conditions agreed upon by both the buyer and seller regarding the sale of a real estate property. A real estate purchase agreement can go by different names depending on state laws, such as Real Estate Sales Contract, Home Sale Contract, or Real Estate Purchase Contract. One thing that is common with all real estate purchase agreements is that once both parties agree on the purchase price and sign off on the contract, the purchase agreement becomes a legally binding contract from the closing date onwards. This is important because breaching any terms of the contract, whether knowingly or unknowingly, could result in severe penalties. Some important real estate purchase agreement terms buyers and sellers should understand include Licensed Real Estate Agent, Addendum, Earnest Money Deposit, and Buyer Beware. A licensed real estate agent is a person who is allowed, by the state where they operate, to oversee the sale and purchase of real property after having completed the necessary courses and passing the mandatory state exam. An addendum is any additional form that's attached to the original copy of the real estate purchase agreement. To prove to the seller that they are serious about purchasing the property, a buyer may be required to make an earnest money deposit as part of the purchase agreement. And in states where the Buyer Beware way of conducting real estate transactions is used, it means the seller is under no obligation to reveal certain issues regarding the property's condition. This is also commonly referred to as caveat emptor, meaning the buyer agrees to buy the property as is. Another important real estate purchase agreement term is contingencies. If any clause is included in the real estate purchase agreement that specifies a requirement or action that needs to be met for the purchase agreement to be considered legally binding, this is referred to as a contingency. In most states, it's normal for real estate purchase agreements to come with the following items attached or included as contingencies. appraisal, home sale and kick-out clause, title, inspection, and disclosures. Now, while most people only seem to worry about obtaining financing for an investment property, it's the details of the purchase agreement that usually have the biggest bearing on a real estate transaction. Because of this, it's important to make sure the buyer and seller both include all the important aspects of the real estate transaction, such as the following. Additional details of both parties involved in the transaction, such as names, addresses, phone numbers, and emails. A complete property description, such as the one available at the county recorder's office detailing the location, ownership, fixtures, improvements, privileges, and appurtenances associated with the real estate, clearly stated and agreed upon purchase price, as well as the required down payment and earnest money deposit. The terms of financing the home sale transaction, as well as any third-party financing addendums that the seller may need to be made aware of. A title policy at the seller's expense that will be issued to the buyer to guarantee that the ownership of the property, as well as other issues with liens and loans, is exactly as stipulated in the real estate purchase contract. A survey of the property inspected at the seller's expense, which is issued to the buyer and the title company handling the transaction. The seller obligated to issue a property disclosure stating that they do not know of any material defects that the property may have that may affect its value other than those stated in the purchase agreement. Specific statutory disclosures, such as a lead-based paint disclosure, that are one of the seller's obligations to the buyer by law. A property inspection report to be conducted at the buyer's expense or added to the closing costs by any professionals of their choosing. Terms of the escrow agent handling the transfer of property from the seller to the buyer, as well as all the associated payments and closing costs. The request for and completion of any necessary repairs and improvements to the property that the buyer may have identified during their due diligence. The closing date on which all the terms and conditions mentioned in the purchase agreement will become legally binding. Possession of the property in its current or acquired state with accepted signs of wear and tear that will be delivered to the buyer by the seller on the agreed-upon closing date, provided that the terms and conditions of the purchase agreement are met. Both parties agreeing that the escrow agent is necessary but not a part of the purchase agreement, nor liable for any loss of or interest made on earnest money. The buyer agreeing to withhold 10% of the purchase price to be submitted to the IRS unless the seller meets certain conditions for exemptions, such as when the total proceeds from the sale do not exceed $300,000 and the buyer will be using the property as a residence. And signatures from both parties involved in the real estate purchase contract to make the document legal. Now, to cut down on closing costs, some people usually try to cut corners and end up leaving out important documents that are necessary for all legal real estate contracts. The following are some of the documents you need to include, depending on the nature of the real estate purchase agreement. Land contract. This is required to document any loan that is agreed upon between the buyer and the seller that states the deed of the property will only be transferred to the buyer once the full amount of the loan has been paid. Deed of Trust. This is required when the property is transferred to a trusted third party, such as an escrow agent, to hold and trust until the loan has been paid off. Warranty Deed. This is the document issued to the buyer that proves the property in question is not under any liens from third parties that would otherwise mean a renegotiation of the purchase price. Quit Claim Deed. A quit claim deed is used when transferring the title of a property to another person even though there are no title warranties. Once a real estate contract has been signed by both parties involved and is handed over to the escrow agent overseeing the transaction, it's very difficult for either party to back out of the agreement after the closing date has passed. However, life sometimes leaves very few options to choose from in certain situations, and as such, you may find yourself wanting to back out of a purchase agreement. The following are common reasons for terminating a real estate purchase agreement. Failure to pay a deposit, buy mutual agreement, material defects found during the inspection period, failure to obtain financing, and cancellation during the inspection period. However, as a legally binding document, a real estate contract is not an easy thing to back out of without incurring penalties. If you feel you must back out of a deal at all costs, there are a few options you can exploit such as request to the buyer, claim breach of contract, include a back out addendum, or exit while contract is under review. Now let's talk about the pros and cons of using a real estate agent versus FSBO or for sale by owner. In most cases, homeowners end up opting for the security and convenience of hiring a real estate agency to handle the sale of their property. But that does not mean if you want to give it a go yourself, you cannot do that. It's best to look at the situation objectively and choose the best option. With FSBO, there are no agent fees to consider and therefore the closing costs are kept at a minimum. Also, you have a lot more say in the asking price rather than just relying on the valuation of the agent. But FSBO properties usually end up selling for significantly less than those sold by agents and you will still be liable for the fees charged by the buyer's agent. If you're determined to take charge of your own investment decisions and sell your property, you can do so in the following six simple steps. Prep for marketing, set the purchase price based on market value, show the property, receive offers, meet the terms of real estate purchase agreements, and close on the property. There is no need to spend months struggling to sell your property because you are finding it difficult to formulate a real estate purchase agreement. If you visit doorloop.com, you will find all the forms, documents, and resources you need. Well, that's it for this video. If you want more real estate content for your business, make sure you check out our YouTube channel for more door loop videos such as the best property management apps all managers need and the top apartment listing sites for your rentals. Remember to like this video, share it, and of course, subscribe to our channel. Thanks for watching. See you next time.