Offers vs. Purchase and Sales Agreements – Which one is a contract?
There’s a common misconception, especially among first-time home buyers, that an offer to purchase real estate is merely an understanding that the buyer wants to buy a particular home. That’s true – Up to a point, the buyer has total control of the situation…until the offer is accepted.
At this point the offer becomes a legally binding contract on all parties. The buyer takes on certain obligations to see the sale through and the seller gains certain legal rights to hold the buyer to the offer.
The next stage is negotiating and signing the purchase & sales agreement. Buyers need to know that the standard form P&S is a SELLER-biased document. Per this contract, the seller may extend the closing date or keep the buyer’s deposit in certain situations.
As the buyer’s attorney, I review the contract and draft further language to protect my client’s money from the get-go. In short, if there is ever a need to terminate the transaction, my buyer clients will most likely receive their entire deposit back. Remember, a home is the largest investment that most people ever make. Buyers need additional contract language in the offer and the P&S to fully protect their money so they don’t end up losing it if a real estate deal falls through.