What is a Purchase and Sale Agreement?
If you’re buying or selling a house – prepare for paperwork. There aren’t many transactions that rack up the paperwork, meetings, documents, and signatures like real estate purchases. Though all the different forms and documents can feel overwhelming, it’s important to know what you’re doing to protect your financial future.
One of the last and most important documents in any real estate transaction is the purchase and sale agreement (PSA.) If you’re closing down on a home purchase or sell, you need to know the ins and outs of the Real Estate Purchase and Sale Agreement and how to get help on your own PSA. Let’s review what a PSA is, what needs to be on it, and how to get help with PSA questions.
Real Estate Purchase and Sale Agreement
The purchase and sale agreement is the document made after both buyer and seller agree to price and terms on the sale of a property. The PSA details everything you need to know about the sale including:
- Final Sale Price – A price that has been agreed upon on by both buyer and seller. Though it says ‘final’ price, the price can still change dependent on contingencies.
- Title Company – All pertinent information on the title insurance company should be on the PSA.
- Closing Date – Closing is the planned date that the purchase will be complete, the title is transferred, and the seller will receive payment.
- Title Condition – The PSA includes information on transfer of the home’s title.
- Contingencies – Contingencies are plans or goals that must be met before the final sale is completed. If the contingencies aren’t taken care of the sale could be cancelled.
- Disclosures – Provide additional disclosure if information that could affect new homeowner.
Purchase and Sale Agreements in Colorado
PSAs can vary be region so what do you need to know about PSAs in Colorado? Colorado PSAs follow the same rules as above though a PSA might require different pieces of information depending individual counties and municipalities.
The state lays out what it requires in the Colorado 2020 Contract to Buy and Sell Real Estate. Your real estate agent should be able to provide you a Colorado-specific PSA or real estate contract, but you can find several free examples of Colorado real estate contracts online.
Common PSA Contingencies
Appraisal – The deal can be renegotiated or the buyer can back out if an appraisal forces a large price jump or drop.
Financing – The buyer must receive mortgage approval before final closing.
Inspection – Buyers can request an inspection contingency. Prices can be renegotiated in case the inspection turns up a problem.
Title – Allows buyer to back out of deal if there are problems with the home’s title.
Common PSA Disclosures in Colorado
Contingencies and disclosures vary by state. For example, an oil and gas activity disclosure makes sense in Douglas County, Colorado but it wouldn’t make much sense in Ararpahoe County. There are common PSA contingencies in Colorado homeowners should be aware of like:
Methamphetamine – Any history of methamphetamine product in the home must be disclosed.
Oil / Gas – If property includes surface, oil and gas, or mineral rights those rights must be detailed.
Water Source – Many Colorado PSAs must detail how the home receives water.
Special Taxing District – Sellers must disclose if the property has a specialized tax district.
More depending on individual location and property.
Getting PSA Agreement Help
PSAs can be intimidating. There’s a lot of information, contingencies, disclosures, and more all rolled into one form. What if you make a mistake? What if something critical is left off the PSA agreement? It’s understandable a PSA can be scary, but you can shoulder some of that worry on your real estate agent.
A real estate agent is necessary to find and show you homes but they also play a significant role in organizing paperwork like PSAs. Your agent can help get the proper documents, walk you through their significance, and can direct you to further help if they can’t answer all your questions.
A great real estate agent is crucial to receive, explain, and execute many of the documents that comes with real estate transactions like the real estate contract or PSA.
Purchase, Sale, Close, Live
When you buy or sell a home it can fill like you’re swimming in the sea of paperwork, but those forms and documents keep the deal transparent and fair to both parties. Always use a great real estate agent to help you on important forms like purchase and sale agreements so you can sign, close, and start your life in a new home. With The Meissner Group and a great Colorado real estate contract, all parties will be happy.