First Time Home Buyer? What exactly does the Purchase Contract entail?
The deposit
This is an amount presented with the offer that indicates good faith on your behalf for the offer that you are submitting. If you end up with the property this amount will be applied to the sale price. There may be times when you’ll want to supply a larger deposit in order to show the seller that you are very serious about buying this home and hope to have your offer accepted when there are various offers on the table. If for any reason, you are unable to remove conditions, your deposit will be returned to you after the deal has collapsed.
The conditions
These are conditions that you set for the offer. An example of a condition could be Subject to Financing, Subject to Home Inspection and Subject to Condo Documents. These are the most common conditions presented on Offers to Purchase.
The terms
This includes all of the details including the financing and the price you’re offering to pay for the property. On some occasions, terms can include items such as issues that a Buyer or Seller has a concern with. It could be wanting a complete furnace cleaning done, removal of debris in the backyard – the reason could vary but are still legally binding in a contract.
The price
This is the price that you are willing to pay for the home. In many cases you may be given a counteroffer based on the price you’re offering and whether the seller wants is looking for a better price.
The closing date
This is the day when the property finally becomes yours legally and the funds for the home change hands.
Exclusions and inclusions
These are items that are not part of the housing structure but may be included as part of the offer. For example, you may be offered the appliances or the window coverings in the home when you purchase the property. When writing an Offer to Purchase – always check what the property listing has included in the sale of their home. Occasionally the appliances won’t be part of the sale, or window coverings are not included. Always know exactly what is to be included in your purchase price.
Amendments
In some instances, there may be a need to make an amendment to a Purchase Contract. This could be the Home Inspection revealed several issues that could deem a reasonable amount be reduced from the purchase price. It could also include adjusting the Possession Date. In any instance that any adjustments need to be made to your Purchase Contract, ensure that you and your realtor have an amendment of the contract signed by both parties once agreed upon.
