Purchase and sale agreement
Purchase and Sale Agreement: According to the statute of frauds ,contracts relating to real property should be in writing Purchase and Sale Agreement is the main document between buyer and seller in the Real estate Sale.It is also called Sales Contract or Purchase agreement. The main basis of PSA is to bind all the parties according to Terms and Conditions in the agreement . A contract for the purchase and sale of real property is created through the process of offer and acceptance. How Purchase and Sale Agreement is Formed: In a typical transaction,the offeror(buyer) makes an offer to purchase the listed property on some terms and condition . After the seller accepts and signs the offer,a legal binding agreement is formed. Sometimes the seller makes a counter offer and if the buyer accepts that Counter offer then again a binding agreement is formed. Please note, that all the offers must be in writing and signed by all the parties. Here are the steps involved in making an offer: In transactions involving real estate, generally the real estate agent writes up the offer by filling in a purchase and sale agreement. The agreement states the terms of sale along with the price . Traditionally, an earnest money deposit is tendered along with the offer.Earnest money is a deposit made to a seller showing the buyer's good faith in a transaction. The earnest money deposit is usually 3-5% of the purchase price(vary state by state). The pre-approval letter or statement of proof of funds is also accompanied along with the Purcahse and Sale agreemnet. The pre-approval letter and the statement gives seller a confidence that the buyer has financing arrangements and the sale will not fail. The agent then presents the buyer's offer to the sellers agent who then present it to the seller. If the sellers decide to accept the offer, they sign the same form the buyer signed, the agent gives each party a copy, and they have a binding contract. Both the parties in the contract promise to each other- The buyer promise to pay the agreed price whereas the seller promise to transfer a marketable title. Elements of PSA: Some Important elements of Purchase and Sale Agreement are Legal Description Purchase Price Payment Method Closing Date Earnest Money Transfer of Possession Included Items Casualty loss Conveyance and Title Brokerage Commission Agency Disclosure Signatures All the addendums and Contingencies must be stated and accompanied with PSA like Financial Contingency,Inspection Clause Contingency, or Sale of buyers home contingencies. After signing and accepting the Purchase and sale agreement , the agent should provide copy of the agreement to their client.
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