One Point Advantage

The buyer's agent will normally use a standard form of Agreement, developed by the Pennsylvania Association of Realtors* or their local Board of Realtors*. However, when purchasing new construction, the builder will usually require the buyer's offer to be presented on the builder's own, proprietary Agreement form. It is critical that the Agreement contain all of the details included in the transaction. Not only will it serve as the "blueprint" for every aspect of the transaction, but all promises, representations and understandings must be spelled out in the Agreement in order to be binding and enforceable. It will typically include such items as:

Financing contingency, i.e., specifics of mortgage loan requirements
Inspection/testing contingencies
Seller’s obligation to provide clear title to the property
Type of deed to be given, i.e., special warranty or general warranty
Provisions for buyer to conduct a final walk-through inspection of the property
Quality of title to be delivered
Default provisions, and disposition of deposit monies in the event the Agreement is terminated
Method for prorating real estate taxes and utility bills between the parties
Any other understanding between the Parties

Elements of an Agreement of Sale

The Pennsylvania Association or Realtors* Agreement of Sale and most other commonly used forms incorporate the basic legal requirements and other details that should be included in an Agreement. The following items depend on the particular transaction:

Parties/

All sellers and buyers should be listed.

Property

Specify the mailing address, township, county and tax parcel number or uniform parcel identifier number.

Price

Timing of payment of the purchase price should be spelled out, including initial and follow-up deposit, and balance due at settlement. At the time the buyer submits the Agreement of Sale, an initial deposit or $500 to $1000 is given, to provide "consideration" and make any resulting Agreement legally binding. The balance of the deposit, typically between 5% to 10% of the purchase price (the so-called “earnest money”) is then due within a few days of all Parties' acceptance of the Agreement. All deposit money becomes part of the buyer's down payment toward the purchase price and settlement costs. If the buyer's offer or seller's counter-offer is rejected, resulting in no Agreement being formed, any deposit money is returned to the buyer.

Settlement Date

An "on or before" date should be specified, with time being of the essence. This means that the stated date is the actual settlement date, not just a projected or estimated date.

Personal Property

All non-realty items not otherwise listed in the Agreement as "fixtures", but still intended to be included is the sale, should be listed in detail.

Mortgage Contingency

This provision specifies the buyer's mortgage loan requirements, and provides for the refund of the buyer's deposit money if the buyer is unable to obtain the specified financing.

Inspections and Test Contingencies

The Agreement should spell out any inspections and tests of the property that are to be completed to determine the condition of the structural elements of the home and all systems and equipment, as well as exterior conditions and any health/environmental concerns. The Agreement should be contingent upon satisfactory resolution of any issues identified in this process, within defined time limits.

Other

Detail any other matter that the Parties intend to be part of the transaction.