Real Estate Purchase Agreement

A default happens when either party fails to live up to the contract’s terms (e.g., the seller refuses to move out or the buyer fails to secure insurance). The contract will specify the remedies for default, which can include the return/forfeiture of earnest money or even a lawsuit for “specific performance” to force the sale to complete.

Yes! In 2026, “Seller Concessions” have become a popular negotiation tool. A buyer might offer the full asking price but ask the seller to pay 3% of the closing costs. This reduces the amount of “cash-to-close” the buyer needs upfront, which is particularly helpful for first-time buyers managing higher interest rates.

Closing costs are the fees paid at the end of the transaction to finalize the loan and transfer the title. For buyers, these typically range from 2% to 5% of the home’s purchase price.

• Example: On a $400,000 home, expect to pay $8,000 to $20,000 in closing costs. These fees cover loan origination, appraisals, title insurance, and government recording fees.

Yes. If you back out of the deal for a reason not covered by a contingency (e.g., you simply found a house you liked better), the seller usually keeps the deposit as “liquidated damages” for the time their home was off the market. However, if you cancel because your home inspection failed or your loan was denied, your EMD is typically refunded.

Earnest money is a “good faith” deposit you pay shortly after the contract is signed. It shows the seller you are serious about the purchase. In 2026, the standard EMD is 1% to 3% of the purchase price. This money is held in an escrow account by a neutral third party (like a title company) and is applied toward your down payment or closing costs at the end of the deal.

• Financing Contingency: Gives the buyer 30–60 days to secure a mortgage.

• Inspection Contingency: Allows the buyer to walk away if a professional home inspection reveals major structural or safety issues.

• Appraisal Contingency: Ensures the home is worth what you’re paying; if the appraisal comes in low, you can renegotiate or cancel.

• Title Contingency: Protects you if the title search reveals liens or ownership disputes.

Contingencies are “escape hatches” in the contract. They are specific conditions that must be met for the sale to go through. If a contingency is not met, the buyer can typically back out of the deal without losing their deposit.

To be legally enforceable in 2026, a contract must include:

• Identification of Parties: Full legal names of all buyers and sellers.

• Property Description: The street address and the legal description (lot and block number).

• Purchase Price: The agreed-upon amount and the intended payment method (cash vs. mortgage).

• Fixtures and Appliances: A specific list of what stays (e.g., the refrigerator) and what goes (e.g., the dining room chandelier).

• Closing and Possession Dates: When the money changes hands and when you get the keys.

In most traditional residential sales, the buyer’s real estate agent prepares the initial offer using standardized forms provided by state or local Realtor associations. If you are buying a “For Sale By Owner” (FSBO) home or a complex estate, a real estate attorney may be hired to draft a custom contract to ensure all legal nuances are covered.

A purchase agreement (also called a sales contract or purchase contract) is a legally binding document between a buyer and a seller. It outlines the terms and conditions of a property sale. Once both parties sign, the home is officially “under contract.” This document specifies the final price, the closing date, and the “rules of engagement” for the transition of ownership.