Real Estate - An Information Website > Purchasing

The Purchase Offer

Purchase Agreement for Single Family Real Estate

The purchasing process begins with signing the Agency documents to establish clearly what the realtor is doing for you. Then the agent and you will go through the disclosure documents for the particular house you are attempting to purchase. Pay particular attention to:

The Transfer Disclosure Statement: Prepared by the seller to describe the property to you.
The Sellers Supplemental Checklist: Prepared by the seller to describe in great detail the issues that may have arisen over time in the house.
Preliminary Title Report: Prepared by the title insurance company explaining who owns the property and what easements or other land and title issues that may encumber the transfer of title.
Natural Hazards Disclosure Report: Prepared by a third-party company, such as JCP, to show what natural hazards affect that piece of land. It will show earthquake zones, flood areas, and proximity to other natural hazards.
·Structural Pest Report: Prepared by a third-party inspection company to determine the presence of termites or other pests that may have caused damage to the house.
Home Inspection Report: Prepared by a third-party inspection company to determine the repairs that may be necessary to have a fully functioning house.
Particular, State, County, Federal, Local, and Company Discloures that affect the sale of the home.

Then the agent will prepare an offer for you to sign, such as the PRDS Real Estate Purchase Agreement:

The opening paragraph offers a summary of the purchase agreement:

(Buyer): Robert Smith and Mary Smith, not Mr. and Mrs. Robert Smith
sum $1,200,000
located at: 1234 Able Street,
City of: Mountain View

Agency Disclosure: a summary of the listing and selling agents involved.
Financing Terms
1. Deposit: usually 3% in the form of a personal check written to the title company. Deposited three business days within acceptance into escrow.
2. Additional Deposit: Usually increases a small initial deposit up to 3% in the form of a personal check written to the title company.
3. Balance of down payment: usually completes the 10% to 20% down payment including the deposit and additional deposit. This is deposited into escrow through the bank in time to close escrow on the agreed upon date.
4. Loan: The amount the bank is loaning.
5. Other Financing
6. Additional Financing
7. Total Purchase Price:
8. Buyer’s Loan Obligations
9. Financing Contingency.
Appraisal: Subject to a timeframe if stated on 8B.
Buyers Funds: Obtaining the funds description.
Fixtures and Personal Property. Explain what a fixture is to the sellers and buyers, any questions, state it here. Note: Items mentioned in advertisements, fact sheets, MLS, TDS, etc. are not included nor excluded unless expressly provided for in this contract.
1. a. Items Excluded:
2. b. Items Included:
Additional Contract Documents: attach and check, such as As-Is addendum.
Other Terms and Conditions: Try to leave this area blank as it can cause legal issues.
Contingencies: Contingency Removal:
1. Financing Contingency: Often 10 to 14 days.
2. Appraisal Contingency: Often 10 to 14 days
3. Property Condition: Often 5 days.
4. Lead Inspection: often 0 if the house is newer than 25 years, so often 0 to 5 days.
5. Title Contingency: often 0 if the title report is provided.
Close of Escrow:
1. Close of Escrow: State the exact date, or the number of days, for close and delivery of the keys to the buyer.
2. Proration’s and Transfer Tax: taxes, interest on assumable loan, HOA dues, rents.
  1. Seller pays county transfer tax, $1.10 per $1,000
  2. Buyer and Seller split the cost of city transfer, $3.30 per $1,000 for San Jose, Palo Alto, and Mountain View.
  3. Inspect the property one week before closing
  4. Have the escrow office fax the closing statement ahead of time to review before meeting with the client
  5. Cashiers check the day before closing
  6. 8:00 AM records, 10:00 AM notification
  7. Rent Back problems: Buyer wants the keys and to re-key, seller wants to keep keys.
  8. Tues, Wed, Thurs are best days to close, because funding has to occur the day before, so Mon for Tuesday. Friday is a good backup day for Thursday should problems occur.
Real Estate Transfer Disclosure Statement (TDS), Lead-Base Paint Disclosure, Natural Hazard Disclosure Statement (NHDS), and PRDS Supplemental Seller Checklist (SSC) : Seller must deliver to Buyer within 5 days or ___ days of acceptance.
1. Or check each one that was delivered already
2. Check 5 days or ___ days for sign and return if Buyer elects to terminate the contract based on these disclosures
Property Disclosures (environmental, natural hazard, earthquake, tax assessment, tax status, booklets, FIRPTA): Seller shall provide
Buyers Duty to Care: Acknowledges duties of the buyer.
Property Condition, Insurance, Property Disclosures, Lead, Contingencies: These disclosures are made part of this contract. Buyer shall approve as part of this contract.
1. Inspections
2. Inspection Contingencies.
3. Seller Obligations
4. Buyer Obligations
Lead Inspection Contingency: Lead disclosures.
Seller’s Documents: Delivery dates.
Title Insurance: Names the selected title company and who pays. Santa Clara is typically a seller pay county. San Mateo is typically a buyer pays county.
As-Is Provisions: describes the exceptions.
Structural Pest Report (SPC)
1. Buyer accepts the Seller’s report.
2. Section 1 work must be completed prior to closing.
3. Inaccessible areas to be paid by buyer if no damage.
4. Supplemental Reports;
5. Fumigation requirements.
Seller’s Repair/ Maintenance Obligations; Risk of Loss: limited to known or discovered before close of escrow.
1. Condition of roofs, skylights, appliances, plumbing, heating, etc.
2. Broom clean condition of the remainder of the property
3. Risk of Loss: material damage to property prior to close of escrow may terminate this contract, all monies returned.
Contingency Removal and Cancellation Rights:
Repairs/Walk through Inspection: All repairs must be made prior to close of escrow by a licensed contractor. Note: the CAR form allows unlicensed workers.
Seller’s Obligation to Maintain Property During Escrow:
Home Protection Plan: A plan shall be ordered by __Buyer or __Seller or is __ waived, not to exceed $____ (usually $275) and shall be paid for __Buyer or __Seller or ___split 50/50
Escrow Instructions and Tax Prorations:
Legal Nature of Agreement:
1. Entire Agreement: this is the full and final agreement. No alterations except in writing.
2. Forms.
3. Parties:
4. Acceptance and Delivery:
5. Binding Agreement: binding upon heirs, assignees, etc. until close of escrow.
6. Attorney’s fees: Prevailing shall be entitled to attorney’s fees.
7. Dissemination of Information: MLS must be notified within 48 hours of closing.
8. Legal, Tax, Title, and Other Advice: consult an attorney
9. Governing Law: State of California
10. Risk of Loss:
11. Time is of the Essence statement:
12. Equal Housing Statement
13. egan’s Law:
Liquidated Damages: initial to authorize. Advise talking to a lawyer. This paragraph limits the seller to retaining 3% of the purchase price.
Dispute Resolution:
1. Mediation: This paragraph is not optional and binds both parties to agree to mediation before court.
2. Arbitration: initial to authorize. Advise talking to a lawyer.
3. Exceptions:
4. Participation of realtors:
Offer: Contract revoked unless signed copy received by Buyer or __________agent by __________ (date) at ______ (time) or ____ upon presentation.
Brokerage Fee: Has to be what the MLS states. Usually 2.5% or 3%
Counter Offer: Seller signs if a counter-offer is made and attached.
Acceptance: this section must be completed even if a counter-offer is included

At this point, you and the realtor should double-check all of the paperwork and the signature pages.Submit the offer as follows:

Include a 3% earnest money deposit.
Scan the documents in to a pdf file.
Provide a cover letter explaining the offer.
Provide a pre-approval letter from the bank.