CA Real Estate Purchase Agreement: What you Need to Know [VIDEO]

So, you’ve found your dream home.  Exciting!  What’s next?

Drafting and submitting (your Realtor should be doing this for you) the Residential Purchase Agreement (the document known as your “offer”) is next!


The Real Estate Purchase Agreement which consists of the “OFFER” and any Counter-Offers is the document that the entire purchase or sale of a property works around— and it’s vital that you as either a buyer OR a seller, understand it.

As a Home Buyer, this is the document your agent will use to write up your offer based on the terms you decide on, and it lays out the framework and terms for the purchase.

In the Purchase Agreement/Offer, the terms of the agreement will be laid out—such as the PURCHASE PRICE you’re offering to pay for the property, the TIME-FRAME of when the transaction will close and you’ll get the keys (learn more about Transaction Timelines HERE), the EARNEST MONEY DEPOSIT amount (go HERE to learn about the EMD), WHO will pay for certain costs and inspections such as ESCROW FEES, Termite Inspections, Title Insurance etc (go HERE to learn about Closing Costs), what COMES WITH the property—such as whether or not the the solar panels, appliances etc are included in the sale, and, what contingencies you have on purchasing the property—such as if the offer is dependent on you selling your current home FIRST.

Now, although we’d love it if sellers would always just accept the buyers’ terms verbatim, the reality is that the offer is typically a STARTING point which opens the door for further negotiation, and hopefully results in coming to an agreement that works for both sides.  In most cases, if the terms of the initial offer don’t insult the seller (think offering $500K on a $1MM property), the seller will often submit a counter-offer to the buyer.

Note: In competitive markets or with highly-desired properties, a Seller Multiple Counter Offer (“SMCO”) situation may come up.  This is when the seller has received multiple offers on the property, and rather than only counter just one buyer or accept just one offer, the seller chooses to submit multiple counter-offers to multiple buyers simultaneously. (Go HERE to learn more about SMCOs).

The counter-offer indicates that the seller agrees with the terms of the first offer, with the exception of the proposed changes which are listed in the counter offer.  For example, let’s say you as a buyer submit an offer at ten-thousand below asking price, saying you’ll close in sixty-days, and you say the solar panels have to stay.  The next day, the seller sends you a counter offer only stating that the close of escrow must be in thirty days versus sixty.  In this case, if you choose to accept the counter offer, all the terms of your initial offer have been accepted, with the only exception being the shorter time-frame to close.

The California Purchase Agreement can appear intimidating, but don’t let it scare you.  This document is the first step in an exciting path towards owning real estate, and it’s one of the most important documents you’ll deal with when buying a property. 

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