Do I need a purchase agreement?
Why a Purchase Agreement Is Essential
A purchase agreement is the foundational contract for buying real estate. Without it, you have no legal proof of the agreed price, closing date, or what's included in the sale. It also outlines contingencies like financing, inspection, and title review, which give you an exit if problems arise.
In off-market deals, a purchase agreement is even more critical because there's no real estate agent or MLS listing to document the transaction. It prevents misunderstandings and provides a clear roadmap to closing.
What to Include in Your Purchase Agreement
A solid purchase agreement should cover the basics: buyer and seller names, property description, purchase price, earnest money deposit, closing date, and contingencies. It should also specify who pays for title search, survey, and transfer taxes.
If you're buying directly from a seller, you can use a standard state-approved form or a attorney-drafted contract. Many states require real estate contracts to be in writing to be enforceable under the Statute of Frauds.
- Property address and legal description
- Purchase price and earnest money amount
- Closing date and possession date
- Contingencies: inspection, financing, title
- Who pays closing costs and transfer taxes
- Dispute resolution and default clauses
State Variations and Legal Help
Purchase agreement requirements vary by state. Some states mandate specific disclosure forms or attorney review periods. For example, New York requires attorney review for residential contracts, while California has standardized forms from the California Association of Realtors.
If you're unsure, consult a real estate attorney in your state. They can draft or review the agreement to ensure it complies with local laws and protects your interests.
Common mistakes
- Thinking a verbal agreement is enough—most states require real estate contracts to be in writing.
- Using a generic online template without checking if it complies with your state's specific laws.
- Skipping contingencies like inspection or financing, which can leave you legally bound to buy even if problems arise.
