Sign Purchase & Sale Agreement (10-14 days from accepted offer)
A typical Offer to Purchase will state that you have 10 to 14 days to sign a Purchase & Sale Agreement once the offer is accepted. After the home inspection and any supplemental inspections have been completed, it is time to start negotiating the Purchase & Sale agreement. Your attorney will be a very valuable resource at this point in the process. If you find from the home inspection that there is moderate to major work that needs to be done, you will want to try to negotiate the price down. **Remember, if the seller is unwilling to negotiate the price and you are not comfortable with the cost of the repairs, your home inspection contingency gives you the right to walk away from the deal and get your deposit money back.** You will also want to make sure that everything you asked for in the accepted offer, such as a washer and dryer or refrigerator, gets translated to the Purchase and Sale agreement. While you are negotiating the P&S you will want to be shopping for a mortgage (see previous step). This is because you will want to submit your mortgage application as soon as you sign your P&S. This is crucial because you are on a timeframe that is established in your P&S and the earlier you submit your application, the more time the underwriter has to review your application, increasing the chances you meet your finance date.
At this point it is a good idea to review the real estate attorney’s role in the process. Whether you are working with your own attorney or an attorney hired by your lender, they will review the P&S and help negotiate the best terms on your behalf. If a Standard Purchase & Sale form is being used, your attorney should make some adjustments. As part of signing the P&S, you will put down at least a portion of your down payment. This further commits you to the purchase, but there are still contingencies in place protecting your money. Condos have a separate Standard Purchase & Sale Agreement. If you are buying a condo, your attorney should review the condo documents and make sure you are familiar with the rules and regulations.
The mortgage contingency clause starts in your Offer to Purchase, but gets carried over to the Purchase and Sale agreement. This contingency gives you protection to terminate the agreement with the seller if you are not approved for a mortgage loan. Keep in mind, your loan application can be denied for factors that are out of your hands, such as an appraisal that does not satisfy the lender. In the P&S the mortgage contingency is given a finance date. This establishes a date by which you need to receive a commitment letter from your lender stating that you are approved for the loan. If you let this date lapse without your commitment letter, you are putting yourself at risk of losing your deposit money from the time of the offer and any money you put down at the time of the P&S. To ensure this does not happen you should be aware of what the finance date and contact your loan officer and your attorney if you are approaching that date without a commitment letter in hand. If your loan officer cannot guarantee that you will have the letter in time, your attorney should negotiate an extension of the finance date with the seller’s attorney.