The difference between offers and purchase agreements is easy to explain, but often gets mixed up by first-time homebuyers and inexperienced realtors. An offer is a written proposal to buy a property with conditions baked in. The buyer’s agent helps to write it up and delivers it to the seller’s agent. Purchase agreements are an actual agreement between the buyer and the seller also sometimes called a real estate contract.
The important difference is that an offer hasn’t been agreed upon yet.
A signed purchase agreement also usually contains the terms of the sale, spelling out what is required for the sale to be completed and that both parties have agreed to. The terms include:
- Sales/closing target date
- Deadline by which the offer expires
- Earnest money deposit amount
- Details about who pays for inspections, survey, title insurance, etc.
- Details about adjusting utilities, property taxes, and other fees
An offer that hasn’t been agreed upon has can also be made with an oral offer or a letter of intent. An oral offer isn’t very enforceable and can be very difficult to prove. A letter of intent, on the other hand, sets forth the terms you propose to buy the home and usually states that the terms will be listed after being agreed upon in the purchase agreement.
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