Real estate purchase agreement template

Real estate purchases are often complex, with lots of contingencies and moving parts. In this guide, we'll explore how you can simplify real estate purchase agreements, covering everything from how they're managed to what you should include within your template.

What is a real estate purchase agreement?

A real estate purchase agreement is a legally binding document that details the terms under which a property is sold to a buyer in a real estate transaction. 

This real estate contract specifies the sale price, property details, responsibilities of both parties, and the timeline for completing the transaction, among other things.

By doing this, it provides a clear framework for the transaction, ensuring both parties understand their obligations during the property sale and can progress with the sale as quickly and smoothly as possible. 

When are real estate purchase agreements used?

Real estate purchase agreements are used in a variety of scenarios, including:

• Residential property sales: When buying or selling a home, this agreement sets the terms of the transaction and ensures both parties understand their contractual obligations.
• Commercial property sales: Businesses purchasing or selling office space, warehouses, or other commercial properties use these agreements to outline the specific terms and conditions of the sale.
• Land sales: When purchasing undeveloped land, this agreement details the terms of the transaction, including any zoning or development conditions.
• Investment properties: For transactions involving rental properties or properties intended for resale, the agreement ensures the investment terms are clearly defined and agreed upon.

Why is a real estate purchase agreement important?

A real estate purchase agreement is important because it affords legal protection and clarity during high-value transactions such as property sales. 

With the median home sales price at $385,000 in the US, real estate purchases are among the agreements with the highest contract value, and therefore the highest risk if not governed by a contract.

The real estate purchase agreement protects each parties’ interests and aligns their expectations by doing the following things:

• Defines the property: Clearly describes the property being sold, including its address, legal description, and any fixtures or personal property included in the sale.
• Specifies the purchase price: States the agreed-upon price that the buyer will pay for the property and the contract payment terms.
• Outlines contingencies: Details conditions that must be met for the sale to proceed, such as financing approval, property inspections, and necessary repairs.
• Establishes timelines: Sets the timeline for the transaction, including deadlines for inspections, financing approvals, and the closing date.
• Allocates responsibilities: Clarifies which party is responsible for expenses like closing costs, property taxes, and other fees.

When is a real estate purchase agreement used?

Real estate purchase agreements will be drawn up and used once the real estate agent (the seller) and the individual or business purchasing the property (the seller) have agreed to progress the transaction. 

This means that there will be plenty of stages that happen in the real estate purchase before the contract is created, such as:

1. Property listing and marketing: The seller lists the property for sale, often with the assistance of a real estate agent. Marketing efforts are made to attract potential buyers to view the property and drive interest.
2. Property viewing and inspection: Interested buyers schedule viewings to assess the property. They may also conduct inspections to evaluate the property's condition. These are often completed by third party surveyors, too.
3. Offer and negotiation: Once a buyer is interested, they submit an offer to the seller, subject to their financing getting approved. The seller can accept, reject, or counter the offer, leading to potential negotiations over the purchase price and terms.
4. Agreement on terms: After negotiation, both parties agree on the sale price, contingencies, and other essential terms of the sale. This mutual agreement is typically verbal or outlined in a preliminary document.
5. Due diligence period: The buyer may conduct further due diligence, including obtaining financing, verifying the title, and ensuring that all necessary inspections and appraisals are completed to the right standard.

This is a lengthy process, with it taking around six months to buy a property on average in the UK, and between two to six months in the US. 

Who is responsible for creating a real estate purchase agreement?

Real estate purchase agreements typically involve several different stakeholders. However, the lawyer or attorneys on the seller’s side will be responsible for drafting the real estate sales contract initially. The legal team will also need to complete other checks, like their legal right to sell the property, and the state-specific laws they need to comply with. 

Beyond that, real estate agents and buyers will review, negotiate, and eventually agree the real estate purchase agreement by signing the contract. 

In more complex transactions, other professionals such as mortgage brokers, home inspectors, and title companies may also be involved in managing various aspects of the agreement.

​​What should a real estate purchase agreement template include?

A comprehensive real estate purchase agreement template should include the following elements:

Property details

The full address, legal description, and any included fixtures or personal property included in the real estate purchase. This section should provide a clear and accurate description of what is being sold, clarifying boundaries, usage rights, and more.

Purchase price

The agreed-upon amount the buyer will pay for the property, including any fees or securities. These shouldn’t be a surprise to either party, as the purchase price (and subsequent fees) will have been agreed informally before the contract is shared and signed. 

Earnest money

The sum of earnest money or initial deposit made by the buyer to demonstrate their commitment to the transaction. This section should outline the amount, the conditions under which it will be refunded, and how it will be applied to the purchase price.

Contingencies

A list of conditions that must be met for the sale to proceed, such as financing approval, property inspections, and any necessary repairs. Common contingencies include the buyer securing a mortgage, the property passing a home inspection, and the appraisal meeting or exceeding the purchase price.

Closing details

The date and location of the closing, and responsibilities for closing costs. This section should specify when and where the transaction will be finalized and outline who is responsible for various expenses associated with the closure.

Possession date

The date when the buyer will take physical possession of the property. This may or may not coincide with the closing date, depending on the agreement between the parties.

Prorations and adjustments

This section should cover how certain costs, like property taxes, utilities, and homeowner association fees, will be prorated between the buyer and seller up to the closing date.

Financing terms

If the purchase is contingent on financing being secured, a section of the real estate purchase agreement should detail the type of loan, interest rate, and the time period for securing financing. 

Default and remedies

Outline the consequences if either party fails to fulfill their obligations under the agreement. This section may include provisions for forfeiture of earnest money, specific performance, or other legal remedies.

Disclosures

Any key information about the property's condition or legal status, such as known defects, environmental hazards, or zoning issues, that may impact the buyer’s decision. This section ensures the buyer is fully informed about the property's condition, and they can make a more educated purchasing decision.

Signatures

Signatures of the buyer and seller, and the date of the agreement. This section formalizes the agreement and makes it legally binding and enforceable. 

Why are real estate purchase agreements difficult to manage?

Firstly, it’s common for real estate transactions to involve a lot of different people, with different approvals and contingencies required from each of these stakeholders. For example, financing is dependent on mortgage lenders, and the final decision to purchase a property depends on checks and balances behind the scenes.

This back and forth can create friction throughout the contract management process, especially when communication is spread across different versions of the agreement, and platforms.

Real estate contracts transactions are also subject to lots of different laws and regulations, so real estate professionals should partner with reputable attorneys and lawyers to advise and represent them throughout the drafting and negotiation process. Investing in this legal expertise is the key to reducing contractual risk and protecting your assets during these high-value transactions.

This is all complicated further by the fact that real estate agencies typically manage tens, or hundreds of these agreements at any given time. Without repeatable processes in place, this can create chaos for the agents, and an even worse experience for buyers. 

Automate real estate agreements with Juro

Juro’s contract management software simplifies the management of real estate contracts, including home purchase agreements, lease agreements, and more.

Here's how Juro's features make this possible:

A single workspace to manage contracts

Juro provides a single, browser-native platform where all real estate agreements can be stored, tracked, and managed centrally. This eliminates the confusion of having multiple versions of your contracts scattered across different folders and platforms, ensuring that all stakeholders have real-time access to the latest contract information.

Automated approval workflows

Juro allows you to set up custom workflows for approving contracts. This automatically routes real estate contracts to the right stakeholders at the right time, speeding up the transaction and ensuring that nothing falls through the cracks, even in complex, multi-party agreements.

Real-time collaboration and negotiation

Juro enables seamless collaboration between all parties involved in a real estate transaction. Stakeholders can negotiate, comment, and make changes directly within the platform, reducing delays and ensuring that everyone is aligned throughout the process.

Native electronic signatures

Juro’s native eSignature feature allows parties to sign contracts digitally rather than in wet ink, making the contract execution process faster and more convenient. This is especially valuable in agencies that manage contracts at scale where speed is essential.

Advanced analytics and reporting

Juro’s CLM platform offers in-depth analytics and reporting tools that provide visibility into contract performance and compliance. This helps real estate professionals stay ahead of deadlines, monitor key milestones, and mitigate risks effectively. 

That’s why Juro is the contract management tool of choice for growing businesses in the real-estate and proptech space, with customers like AppearHere, WeWork and HappyCo. To join the 6000+ companies already using Juro to manage their contracts, fill in the form below.