Real Estate Terms The Purchase Contract Flashcards

Real Estate Terms (The Purchase Contract) Flashcards Purchase Contract/Purchase Agreement/Sales Contractcontract used in the sale of real property that outlines the responsibilities of the parties and terms of the sale What are the required elements in a Purchase Agreement according to CA law?

• Identities of the seller and buyer2. Identity of the

property3. Purchase price4. The time and manner of payment Lease-Option Agreementcontract in which the buyer can lease a property for a period of time (usually a year or two) and then have the option to buy the property.Appraisal ContingencyA contingency in a sales contract that the property must appraise at a value that is equal to or greater than your offering price.Assesor's Parcel Numbera number assigned to a parcels of property by the area's jurisdiction for identification and record keeping (can be found on tax bill or MLS) The buyer should conduct their final walkthrough within __ days before COE.5 What does a purchase agreement accomplish? 1. Establishes the details of the agreement between the buyer and seller2. Identifies the legal rights and obligations of the buyer and seller Multiple Offeroccurs when more than one party submits an offer on a single property

• Ways to Counteroffer1. Strike and Rewrite2. Make it New

Strike and RewriteStrike out the terms being changed in the original offer and write new ones. The counterofferor needs to initial each change. This can quickly get messy, though, if you're going through several rounds of negotiations.Close of Escrow (COE)A real estate transaction that has been completed and the sale is final.Earnest MoneyFunds paid to confirm or commit to a contract "As Is" Clauseif this clause is included in a contract, then the buyer agrees to accept the property in the condition visible or observable to them; however, the seller must still disclose known material facts What contract needs to be signed before escrow starts?Purchase Contract (RPA) Inspection Contingencyprovides that the buyer may obtain certain inspections of the property and may cancel the contract if the inspections indicate an unsatisfactory or unsafe property condition What percentage of the home price do you normally want your earnest money deposit to be?3% A contract lists the purchase price of $500,000. The buyer is putting down a down payment that is 20% of the

purchase price. They are financing the remaining 80% with a conventional loan. They are also putting down an earnest money deposit that is 3% of the purchase price. What is the balance of the down payment?

$85,000Hint: Remember if financing is involved, the down

payment is the amount of the down payment minus earnest

money deposit.The buyer has __ calendar days after acceptance to remove various contingencies.17 Escrowthe depositing of money, legal documents, and instructions with a third party to be held until the conditions of a contract are fulfilled. Period of time between the signing of the purchase contract and closing date.Addendaan addition to a completed contract that specifies supplementary information to the contract that was not previously included in the contract. Happens before contract is SIGNED Seller Multiple Counter Offer Form (SMCO) California Association of REALTORS® has a form for multiple counteroffers Residential Purchase Agreement and Joint Escrow Instructions (RPA) CAR form for realtors to present offers Sale of Other Property Contingencymakes the transaction contingent on the buyer selling their current property first Preliminary Title Reporta response to an application for title insurance; identifies the title and lists any defects, restrictions, liens, and encumbrances that would be excluded from coverage if the policy were to be issued that very day; does not provide any insurance and may not contain every item affecting title Title Insurancea type of insurance that protects the buyer if problems with the title are found later Home WarrantyA service contract that protects a homeowner from unexpected costs for repair or replacement of major systems (HVAC, water heater).Financial contingencybased on the buyer getting a mortgage. Sellers don't want to overlook this because it's a large loan Close of Escrowin California, the date the grant deed, or other evidence of transfer of title, is recorded for any real property Home Insurancepayment to cover liability losses and damage/loss of home structure and its contents due to natural causes Option to PurchaseA contract giving the optionee the right, but not the obligation, to buy property owned by the optionor at an agreed-upon price during a specified period.Binding Agreement DateThe date that both parties agree on all terms of the contract. When buyer receives seller's acceptance to offer.This date starts the "contingency clock." If the buyer has not removed contingencies by the end of the agreed-upon time period, the seller can cancel the contract. First, though, the seller has to give the buyer how

many days notice before cancelling:

• days

The buyer must make their initial deposit within __ business days after acceptance.3