The Contract of Sale otherwise known as the Purchase and Sale Agreement is a legal document which binds the buyer to a set purchase price and binds the seller to convey the title. The contract also services as the initial directions to the escrow company to begin processing the transaction. When I prepare your Purchase and Sale Agreement, make sure you are perfectly clear about the following details:
Who is paying the various expenses of the sale, including closing costs?
Sellers customarily pay for the real estate commission, title insurance, the State transfer tax, one-half of the closing fee, some document preparation, and their portion of the year's taxes and assessments. Buyers customarily pay for ½ of the closing fee, their portion of the year's taxes and assessments, and their loan fees. Occasionally sellers and buyers decide to share the expenses of buying and selling. This must be negotiated during the purchase offer time and often depends on local real estate market conditions, other terms of the purchase contract, and timing considerations.
Some lenders will allow a credit from the seller to the buyer for a portion of the buyer's nonrecurring closing costs. But they usually won't allow a credit that reduces the amount of the buyer's down payment, or that includes any of the buyer's recurring closing costs, such as fire insurance premiums, interest on the buyer's new loan, property mortgage insurance and property taxes. Lenders' policies vary on how large a credit for nonrecurring costs will be allowed.
What is the actual closing date?
The closing date is the stated in the contract. It is set in the original purchase agreement by agreement between the buyer and seller. It is always nice to set a closing date that leaves you enough time to prepare to move in, and which doesn't cost you unnecessary money. The date of closing can affect your closing costs (make sure to ask your lender for a good faith estimate).
What is the date of occupancy?
Many times the seller will request to remain in the property after closing, in part to assure that closing actually occurs without the seller having moved from the property. If that is the case, the seller actually becomes the tenant of the buyer after closing, so proper documentation is needed..
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