Purchase Agreement for House: Complete Home Buying Guide 2025

Real Estate Purchase Agreement: What You’re Really Signing

You found a house you love. Your offer is in. A PDF titled “Residential Purchase Agreement” lands in your inbox. Twelve pages long and loaded with legal terms.

This isn’t the moment to skim.

A real estate purchase agreement is more than paperwork. It’s the binding contract that controls how your real estate transaction happens. Once you sign, backing out gets expensive and messy.

This guide breaks down the components, key terms, and decision points to help you understand what you’re signing.

What Is a Home Purchase Agreement?

A purchase agreement goes by different names. Real estate purchase contract. Home purchase agreement. It’s the legal document that locks in the deal between buyer and seller:

• Defines who’s buying and selling.
• Describes the property using legal terms.
• Spells out the purchase price everyone agreed on.
• Lists conditions that need to happen before the sale closes.
• Covers what happens if someone tries to back out.

Every real estate transaction starts here, from single-family homes to investment properties.

What Does a Real Estate Purchase Agreement Include?

A standard purchase agreement needs these pieces:

• Names of buyer and seller (full legal names).
• Property’s legal description plus address.
• Purchase price and how payment works.
• Earnest money deposit rules (amount, timeline, refund conditions).
• Contingencies like inspection, financing, and appraisal.
• When you get possession and any rent-back deals.
• Who pays closing costs.
• Property tax splits.
• What stays with the house (fixtures, appliances).
• Inspection periods.
• What happens if someone defaults.
• Signatures and signing date.

Missing any of these? The contract isn’t complete, which means it might not hold up legally.

Who Drafts the Purchase Agreement and When?

Usually, the buyer’s real estate agent writes the initial agreement using state-approved templates. In some regions, like New York, the seller’s attorney typically drafts the first contract. States with attorney requirements mandate legal involvement in drafting or reviewing agreements.

Here’s how it typically works:

Buyer submits an offer using the purchase agreement. Seller looks it over and accepts, rejects, or counters. Once accepted, everyone signs and the contract deadlines start ticking.

Some states require a real estate attorney to write or review the agreement. Others let agents handle everything. Check what your state requires.

Contingency Clauses and Why They Matter for the Buyer and the Seller

Contingencies are conditions that need to happen for the sale to go through. They protect buyers and create legal ways out without penalties. Some examples are:

Financing contingency: Buyer needs to get a mortgage loan.

Home inspection: Buyer can walk or renegotiate if major problems surface.

Appraisal contingency: Protection if the home appraises below the sale price.

Sale of current home: Buyer can cancel if they can’t sell their existing house.

HOA or zoning reviews.

You can waive contingencies to make your offer stronger. That’s a risky move because it removes your safety net.

Earnest Money Details in a Sales Contract

Earnest money shows you’re serious about buying. Think of it as good-faith money. Typically, this is 1-3% of the purchase price.

A broker, attorney, or title company holds it in escrow. You might get it back if a contingency falls through. You lose it if you back out for no good reason.

The purchase agreement should spell out how much earnest money you need, who holds it, when it’s due, and when you get it back.

Missing an earnest money clause often means trouble later.

What Conditions Must Be Met to Make an Agreement Legally Binding?

There are several conditions that must be met when you sign a purchase agreement to ensure it is legally binding. 

Once everyone signs, you’ve got a binding contract. Either side can face consequences for backing out without cause. The affected party can pursue forfeiture, specific performance, or file a lawsuit. Most agreements include dispute resolution language like arbitration or mediation.

Purchase agreements need proper signatures with all terms clearly agreed upon.

State-by-State Variations in Purchase Agreements

Real estate contract rules change depending on where you live:

Some states require an attorney to write or review the document. Others let licensed real estate agents prepare contracts using approved templates. Disclosure requirements, earnest money rules, and timelines vary, too.

Check your state’s rules. Get a real estate attorney involved if the transaction gets complicated.

Real Estate Sales Contract Timeline

Here’s how a typical real estate contract timeline unfolds:

• Buyer signs and submits the purchase agreement.
• Seller accepts and both parties sign.
• Earnest money gets deposited.
• Contingencies get resolved (inspections, appraisal).
• Title search and closing documents get prepared.
• Loan approval and funding happen.
• Final walkthrough occurs.
• Closing appointment.
• Ownership transfers.

Expect somewhere around 30-45 days from start to finish. Delays happen because of financing hiccups, inspection problems, or legal review. So that time could be longer depending on your situation.

PSA vs. Purchase Agreement

Sometimes you’ll see “PSA” instead of “purchase agreement.” PSA stands for Purchase and Sale Agreement.

Most of the time, PSA equals purchase agreement. Some regions use PSA for more detailed commercial or investment property contracts. For residential home purchases, the terms mean the same thing.

Your real estate professional should clarify which document is standard where you live.

Mistakes That Can Derail a Deal if You Are Buying or Selling

Misspelling names or entities. Mixing up calendar days vs. business days. Failing to define terms clearly. Forgetting what happens if someone backs out after the contingencies expire. Relying on verbal agreements that aren’t written down. Missing property details or unclear inclusion language.

Every real estate transaction is a legal event. Details count.

Plan to Buy a Home? Consider Signing with Signus.

We help you manage the agreement behind this important transaction.

Signus provides secure e-signatures with audit logs for every document and contract, digital signing with signer ID and timestamps, and an AI assistant, Sigi, who can search to find signed documents by property description, date, or clause.

Whether you are an estate agent, investor, or first-time buyer, agreement clarity matters.

Bottom Line: Contracts Matter When You Buy a House or Sell One

A purchase agreement is a legally binding contract that controls how a real estate transaction unfolds.

• Get it wrong: lose earnest money, delay closing, create an unenforceable mess.

• Get it right: have a solid legal foundation for a successful real estate transaction with clear expectations.

_This blog post is for informational purposes only and is not legal advice. Please consult a qualified attorney for your specific situation.