Getting Started With Real Estate Purchase Contracts

When purchasing a home, it’s essential to understand that while buyers are responsible for their own due diligence, sellers are legally required to disclose any information that could significantly affect the property’s value. Real estate agents and brokers are also obligated to disclose all pertinent information about the property and clarify their duties to both buyers and sellers.

Understanding Real Estate Purchase Contracts

In the Bay Area, two main sets of contracts are typically used: PRDS (Peninsula Regional Data Service) and CAR (California Association of Realtors). It’s important to avoid mixing forms from both, as they have different requirements. For example, CAR contracts often default to “AS IS” conditions, while PRDS contracts require minimum property conditions. These distinctions can impact repair obligations and even affect mortgage approval, making it crucial to choose the right contract forms.

Agency Disclosures: What You Need to Know

Agency disclosures are one of the first documents you’ll encounter. They outline the duties and responsibilities of your real estate agent and broker. In many cases, your broker may represent both buyers and sellers in the same office, which is why dual agency disclosures are common in Silicon Valley. It’s crucial to work with an experienced agent who knows how to navigate these situations while providing equal opportunity to competing parties.

The Importance of Visual Inspections

Real estate agents are required to perform a visual inspection of the property, noting any potential issues. This could include anything from visible mold to water damage. While agents may not be construction experts, they are trained to flag concerns, which are then disclosed to both the buyer and seller.

The Role of the Supplemental Sellers Checklist and Transfer Disclosure

Sellers must fill out a supplemental sellers checklist to disclose any known issues affecting the property’s value. This includes everything from structural problems to neighborhood concerns. Additionally, the transfer disclosure statement (TDS) provides more general information, such as which appliances are included and whether the home has electricity, water, and gas.

Understanding the Purchase Contract

The real estate purchase contract is a comprehensive document that outlines all the terms of the sale. In competitive Bay Area markets, it’s common to see offers with few or no contingencies. Buyers should carefully review liquidated damages clauses, which outline what happens if a contract is breached, and should always consult a licensed attorney to understand their implications.

Square Footage and Lot Size Advisory

When it comes to pricing a home, square footage and lot size matter. However, not all square footage measurements are equal. In Silicon Valley, some features—like enclosed patios—may not count toward livable space. Buyers should understand that square footage figures can vary, and it's crucial to look beyond the numbers.

California’s Unique Real Estate Regulations

California law also requires homeowners to comply with specific regulations regarding water heaters, smoke alarms, and carbon monoxide detectors. These are essential safety features that must be in place before a sale is finalized.

Final Walk-Through Inspection

Before closing, buyers have the opportunity to conduct a final walk-through to confirm the property is in the agreed-upon condition. This is also the time to ensure any negotiated repairs have been completed. The findings of the walk-through are documented and provided to both parties.