Real Estate Purchase Agreement
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Frequently Asked Questions
What is the earnest money?
Earnest money is the deposit that the Buyer is required to provide to the Seller up front, in order to convey that the Buyer is serious about purchasing the property. It is the cash deposit paid by the prospective Buyer to the Seller, as evidence of good faith to complete the purchase transaction.
This deposit will be credited to the sales price upon closing but will be forfeited if the Buyer defaults. It ensures that the Buyer is serious about obtaining the necessary financing and fulfilling the other conditions necessary to purchase the house. Without earnest money, some buyers may not use their best efforts to obtain financing and may still be looking for a better deal on other houses. Often, if the Buyer does not proceed with the transaction, the Seller can keep the earnest money as damages.
This deposit will be credited to the sales price upon closing but will be forfeited if the Buyer defaults. It ensures that the Buyer is serious about obtaining the necessary financing and fulfilling the other conditions necessary to purchase the house. Without earnest money, some buyers may not use their best efforts to obtain financing and may still be looking for a better deal on other houses. Often, if the Buyer does not proceed with the transaction, the Seller can keep the earnest money as damages.
What is escrow?
An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow company.Typically, the agent is a person (commonly an attorney), escrow company or title company, depending on local practice.
What is the Sales Price?
In your specific case 'sales price' is the correct expression if you are referring to regular, non-discount sales. Sale price : The discounted price of an item from the regular selling price.
What is third party financing?
Financing from a bank or private source other than the Seller.
What is seller financing?
Seller financing is just what it sounds like: instead of the buyer getting a loan from the bank, the person selling the house lends the buyer the money for the purchase. The buyer and seller execute a promissory note providing an interest rate, repayment schedule, and consequences of default.
What is assumption?
Assumption of the unpaid principal balance of one or more promissory notes or mortgages.
What is no financing?
The Buyer is paying the full amount of the Sales Price with cash.
What is title insurance?
Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.
What is survey of the Property?
A property survey shows the boundaries of the property indicating the lot size, and includes a written description of the property. Property surveys, which resemble a map, are carried out during the original construction of a house and are provided to the buyer at that time.
What is a commitment?
A commitment is a promise by an insurance company to issue a title insurance policy on a particular piece of property.
What are exception documents?
Exception documents are items evidencing matters affecting title to the property which are excluded from coverage of the title insurance policy.