A purchase agreement — also called a sales contract or purchase contract — is a legally binding contract between a buyer and a seller that spells out the exact terms of a home sale. Once both parties sign it, the deal is officially "under contract."
Key Elements of Every Purchase Agreement
Every purchase agreement must include four core pieces of information to be valid:
The agreed-upon amount the buyer will pay. This is the number both parties negotiated and signed off on — it's locked in by the contract.
The specific date when the title transfers from seller to buyer. Missing this deadline without agreement from both parties can legally put the deal at risk.
What stays with the house (appliances, light fixtures, curtain rods) and what the seller takes. These must be listed explicitly to avoid disputes at closing.
Conditions that must be satisfied before the deal closes. If a contingency isn't met, the buyer may be able to exit the contract without penalty. (We cover these in detail in Lesson 2.)
Offer vs. Counter-Offer Process
A purchase agreement doesn't just appear — it's the result of a negotiation. Here's how it typically unfolds:
- Buyer submits an offer: The buyer's agent drafts the purchase agreement and the buyer signs it. This is the initial offer — it includes the price, closing date, and any contingencies the buyer wants.
- Seller reviews and responds: The seller can accept (the deal is done), reject (offer dies), or issue a counter-offer — changing one or more terms (often the price or closing date).
- Counter-offer goes back to the buyer: Now the buyer decides: accept, reject, or counter again. This can go back and forth multiple times.
- Mutual acceptance: When both parties sign the same version of the agreement without any additional changes, the contract is "executed" and the deal officially begins.
The moment of mutual acceptance also starts the clock on all contingency deadlines — which is why the exact date and time of signing matters enormously.
As a Transaction Coordinator (TC) at Title X, the purchase agreement is your bible for every deal. Every date, every term, every dollar amount in that contract becomes a task on your checklist. You track it all — closing date, contingency deadlines, what's included. If you miss a date, a deal can collapse or a client can face legal consequences. Knowing what's in the purchase agreement isn't optional — it's the job.
A contingency is a condition written into the purchase agreement that must be met for the deal to move forward. Think of it as a built-in exit ramp: if the condition isn't satisfied, the buyer can typically walk away from the deal without losing their deposit.
The Three Main Contingencies
The buyer must secure a mortgage loan by a specific date (e.g., within 21 days of signing). If the lender denies the loan and the contingency is still active, the buyer can exit the contract and get their earnest money back.
After signing, the buyer has a set number of days (typically 7–10) to have the home professionally inspected. If major issues are found, the buyer can request repairs, renegotiate the price, or walk away entirely.
The home must appraise at or above the purchase price. If the appraiser values the home below what was agreed, the buyer can renegotiate or exit the deal — because the lender won't loan more than the appraised value.
Waived vs. Removed: What's the Difference?
These two words sound similar but mean very different things — and confusing them is a common mistake for new TCs.
Waived means the buyer chose to skip the contingency entirely when writing the offer. There's no protection at all. In a competitive market, buyers sometimes waive contingencies to make their offer more attractive — but it adds risk.
Removed means the contingency existed but has been formally satisfied and released. For example, after the buyer's loan is approved, the financing contingency is "removed" — meaning the buyer is committed and can't back out using that reason anymore.
Once a contingency is removed (not just expired — formally removed in writing), the buyer loses the protection it provided. This is a critical distinction because it determines whether earnest money is at risk.
As a TC, you track contingency deadlines religiously. You'll often build a "deadline calendar" the moment a deal goes under contract — inspection deadline, financing deadline, appraisal deadline. Missing even one of these can kill a deal or expose your client to legal liability. Your calendar is the team's safety net.
When a buyer's offer is accepted, they're asked to put some money on the line to prove they're serious. That deposit is called earnest money — a good-faith payment that typically equals 1–3% of the purchase price, submitted within a few days of mutual acceptance.
For a $400,000 home, that's $4,000–$12,000 that the buyer must hand over right away. It signals commitment — and it comes with real financial consequences if the buyer backs out without cause.
What Is Escrow?
Escrow is a neutral third party — often a title company or escrow company — that holds money, documents, and other assets on behalf of both buyer and seller during a real estate transaction. Neither party has access to the funds until all conditions are met and closing is complete.
This neutrality is essential: it protects the seller (the money exists and is accessible) and the buyer (the seller can't run off with the deposit). Escrow is where trust is institutionalized in real estate.
When Is Earnest Money at Risk?
The buyer backs out of the deal without a valid contingency to protect them. For example: all contingencies have been removed, but the buyer simply changes their mind. The seller keeps the earnest money as compensation for taking their home off the market.
A contingency is triggered and the buyer exits legally. Examples: loan is denied (financing contingency), inspection reveals major structural damage (inspection contingency), or the home appraises below purchase price (appraisal contingency). Also if the seller backs out — the buyer gets their deposit returned.
Title X often serves as the escrow holder — meaning we physically hold the earnest money in a trust account during the transaction. This is core to what we do. If a deal falls apart, Title X must determine who gets the deposit based on the contract terms, contingency status, and applicable state law. Understanding earnest money and escrow isn't background knowledge — it directly shapes our daily decisions.
Real estate contracts are rarely just one document. They're typically accompanied by additional paperwork that either adds to the original terms or changes them after signing. Two words you'll hear constantly: addendum and amendment. They sound interchangeable — but they're not.
An addendum is a document added to the contract before or at the time of signing that becomes part of the original agreement. It modifies or supplements the contract terms but is incorporated as if it were written into the main document from the start. Both parties sign it alongside the purchase agreement.
An amendment is a change made to an already-executed (signed) contract. Both parties must agree to and sign the amendment for it to be valid. It only modifies the specific terms it addresses — everything else in the original contract remains unchanged.
Common Addenda You'll See at Title X
- Lead Paint Disclosure Addendum: Required by federal law for homes built before 1978. Discloses known lead paint hazards to the buyer.
- HOA Addendum: Used when the property is in a Homeowners Association — covers HOA fees, rules, and the buyer's right to review HOA documents.
- Inspection Response Addendum: After an inspection, this addendum documents any repairs the seller agrees to make, credits to offer, or items to leave as-is.
- Seller Possession After Closing: Allows the seller to remain in the property for a set period after closing (e.g., a few days to move out).
Why the Difference Matters Legally
Addenda are part of the original deal — they must exist before or at signing. An amendment changes a deal that already exists, so both parties must actively agree to the change in writing. You can't retroactively call something an addendum after the contract is signed. Calling them by the wrong name on official documents can create legal ambiguity — which is why TCs need to know the distinction cold.
As a TC, you manage every addendum and amendment in the file — and you need to track every version. When there are multiple amendments, you need to know which one is most current and make sure everyone is working from the same document. A single outdated version of an amendment making it to the closing table can derail a transaction or create liability. Version control is part of the TC skillset.