The Purchase Contract
There may be other considerations besides price that are equally important in structuring a purchase offer. The terms and conditions of the offer, amount of deposit and possession date are likely to be factors when an offer is made. GR Home Team will help in your preparation of a purchase offer and ensure you understand all components of that offer.
Real Estate Terms You'll Want To Understand
Offer: A written agreement between a buyer and a seller to purchase real estate. Also known as a sales contract, purchase agreement, or buy/sell agreement.
Contingency: Offer on a home has been accepted, but is subject to certain conditions, or contingencies. Examples are frequently the home inspection, lender appraisal, mortgage financing, survey and maybe even sale of an existing home.
Closing Costs: Quoted by your lender. Includes fees to the lender and escrow amounts for property taxes and home insurance. Typically 1-3% of purchase price.
Earnest Money Deposit (EMD): A portion of your down payment is collected at the time a seller accepts your offer. This money shows the buyer’s good faith in a transaction. Typically held in a trust account and refundable during inspections.
Home Inspection: Examination of the property’s condition. Usually performed by a qualified home inspector of your choice. An out of pocket charge to the buyer.
Title: Title insurance protects your right to ownership and against liens or claims from other parties.
Appraisal: Ordered by the buyer’s lender to determine the market value of the home and justify the loan amount.
Appraisal Gap: Additional down payment funds a buyer brings to close to cover a low appraisal amount.
Escalation Clause: A strategy to increase a buyer’s offer by defined increments to beat out other offers the seller receives.
Survey: A drawing based on title showing property boundaries, all easements or restrictions, and all buildings on the parcel.
Assessment: The value the local taxing authority places on the property.
Home Owners Insurance: Protects you and your lender against financial loss in the event of fire or other mishaps to your home.
Closing: The event of signing all final documentation, exchanging money, and transferring ownership of the property between parties.
Possession: The day you get keys and the ability to occupy your new home. Can be different than the closing day, in West Michigan can be up to 30 days after closing.