Chicago Real Estate Lawyers

4 Important Tips for Drafting a Purchase Agreement

Buying a home is one of the biggest financial transactions that you will ever perform. Getting too excited about moving into your new house might cause you to make mistakes during the actual transaction process. Here are four important tips to keep in mind for drafting a sound purchase agreement for the house: 

1. Determine an Exact Purchase Price

While drawing up a contract, it’s best to avoid vague or general language. For example, offers which declare payment of a certain amount more than the available best offer, and all such inexact terms, have been deemed by courts as not being bonafide offers. Put down the specific price that you have in mind for the house.

2. Make an Initial Deposit

In several states, in order to put forth a binding purchase offer, a good faith deposit is a must. Such as arrangement allows for a show of trust for both sides of the transaction parties. The deposit can take the form of cash, cheques, mortgages or personal property documents. You must specify who will hold on to the deposit until the deal is finalized, and that person can be anyone other than the seller. In case of a ‘liquidated damages’ clause enforced by your state, the seller will receive the deposit if you default under the contract.

3. Include Contingencies

It’s always a sound idea to include as many contingencies into the contract as you can think of for covering every eventuality, such as:

a. Carrying out an appraisal of the property

b. Loan funding for the transaction

c. Allowing for physical inspections of the premises.

According to the law of several states, not removing the contingencies in writing means they stay effective all the way to closing.  

4. Include an Expiration Date

Several promising deals fall through simply because the buyer does not announce a fixed period for a seller to respond to the offer. It is always better to call the listing agent and ask about the specific time period for the offer. 

It should also be clarified as to who the accepted offer be delivered to. In case the offer is delivered to you, and you are unable to accept delivery, the transaction could be lost and the seller will move onto another buyer. You may want to consult an experienced attorney for assistance.