The listing agent’s office provides the preliminary P&S by filling in a standardized template using the names, dates and dollar amounts contained in the offer and then emailing the form to each side’s attorney for review and approval.
P&S templates are produced by the Massachusetts Association of Realtors, the Real Estate Bar Association and similar organizations.
The typical purchase and sale agreement is about 10 to 20 pages long and attempts to provide for all possible contingencies in the closing process.
Some of the most important terms are as follows:
- The parties to the agreement
- The property’s description including a detailed list of what appliances are to remain at the house after the sale
- The purchase price and the amount of the deposit
- The date, time and location of the closing
- The buyer’s penalty for defaulting on the agreement. Usually if the buyer breaches the terms of the agreement (i.e., defaults) his deposit will be given to the seller.
- The mortgage contingency clause which specifies that type of mortgage (e.g., conventional, FHA, VA, etc.) the buyer will apply for, the amount of the mortgage, and the date when it will be approved by the lender.
- The deadline for conducting a home inspection and terminating the deal if the inspection report is bad.
These are just a few of the dozens of terms and conditions contained in the average P&S.
The full length and complexity of the document will depend on the parties’ lawyers.
Many lawyers, myself included, prefer to use the standardized forms with little or no revisions.
(I prefer this approach for two reasons. First, the standardized forms are even-handed. They put neither party at a disadvantage and ensure that both the buyer and the seller have adequate legal rights. Second, most real estate agents and lawyers are familiar with the standardized terms and conditions. When a lawyer drastically changes the customary language of the P&S he creates confusion, delays, and rarely adds anything meaningful to the original agreement.)
Once both attorneys settle on the terms of the P&S it will be sent to the buyer’s agent who will meet with his or her client, have the document signed and collect the deposit money.
The deposit and the buyer-signed P&S will be given to the seller’s agent. The deposit will be held in escrow by that agent’s office and the agreement will be forwarded to the seller for signing.
This process can take a few days or a few weeks depending on the agents and lawyers handling the contract.