When Does an Offer Become a Purchase Agreement?
For anyone who has ever gone through the process of buying or selling a home, the terms „offer“ and „purchase agreement“ may be familiar. But for those who are new to this process, it can be confusing to know when an offer becomes a purchase agreement.
In simple terms, an offer is a proposal to buy or sell something at a specific price or terms. A purchase agreement, on the other hand, is a legal document that outlines the details of the sale, including price, closing date, and any other terms that were agreed upon.
So, when does an offer become a purchase agreement? It all comes down to acceptance. An offer becomes a purchase agreement when the seller accepts the offer, either as is or with some negotiations. Once both parties have agreed on the terms, a purchase agreement can be drafted and signed.
It`s important to note that an offer is not a legally binding agreement until it has been accepted. Until that point, either party can back out of the transaction without any legal repercussions. However, once the offer has been accepted, both parties are bound by the terms outlined in the purchase agreement.
It`s also worth noting that there are typically contingencies in a purchase agreement that allow either party to back out of the deal under certain circumstances. For example, a buyer may have a contingency that allows them to back out of the deal if their financing falls through or if the inspection reveals major issues with the property.
In addition, there may be deadlines that both parties must meet in order for the transaction to continue. For example, the buyer may need to obtain financing by a certain date, or the seller may need to complete repairs by a certain date.
In summary, an offer becomes a purchase agreement when both parties have agreed to the terms of the sale and have signed a legally binding document. Until that point, an offer is just a proposal that can be accepted, rejected, or negotiated. If you`re considering buying or selling a home, it`s important to understand the difference between an offer and a purchase agreement and to work with a knowledgeable real estate professional who can guide you through the process.