A real estate purchase and sale agreement is a legally binding contract that contains all the details of a home sale. It’s sometimes referred to as a PSA or a P&S, and is signed when the buyer and seller agree to the terms of the sale.
Note that the purchase and sale agreement is not the same document as the similarly named purchase agreement. The PSA outlines the key terms of the sale and sets a closing day for the transaction, while the purchase agreement is signed at the end of the process to finalize the sale and make the transfer of property official.
What’s Included in a Purchase and Sale Agreement?
Here’s what you can expect a PSA to look like.
The Basics
Some of the more common elements of the purchase and sale agreement include:
- Home purchase price.
- Description of the property.
- Identities of the buyer and seller.
- Proposed closing date.
- Down payment amount.
- How much earnest money is being paid.
- Title transfer and insurance details.
- The escrow company for the transaction.
- How the sale will be financed.
Contingencies
Contingencies are conditions that must be met for the deal to close. If contingencies aren’t met, then that typically means the buyer can back out of the sale. When buyers cancel due to unmet contingencies, the seller usually must refund the earnest money deposit.
Common contingencies include:
- Satisfactory home appraisal.
- Satisfactory home inspection.
- Successful financing.
- Buyer’s ability to sell their current home.
- Clean title.
Sample Purchase and Sale Agreement
Curious about what a home purchase and sale agreement actually looks like? The Federal Deposit Insurance Corp. has made this example available for you to review and download.
Who Writes a Purchase and Sale Agreement?
When the seller accepts the buyer’s offer on a house and both parties agree to the details of the sale, then it’s time to draw up the purchase and sale agreement. The PSA typically is drafted by a real estate agent — though some states require a real estate attorney to write it.
FAQ
Here are answers to some frequently asked questions about purchase and sale agreements.
