It Is Important That You Should Know How to Write a Purchase Agreement

A purchase agreement is a type of contract that is commonly used in transactions where the buyer is purchasing items rather than services. This type of contract is most commonly used in more complicated and costly transactions, such as the purchase of real estate or large, specialized equipment.

A purchase agreement for specialist equipment or other major purchases is drafted after the buyer and seller have agreed on the terms and circumstances of the transaction, as opposed to a purchase order, which can be launched by a buyer before any terms have been addressed. The purchase agreement becomes the contract that codifies and legally binds the agreed-upon terms and conditions.

A purchase agreement is also an important document in the purchase and sale of real estate. A real estate purchase agreement, unlike a business transaction for specialized equipment, can evolve over time as terms and conditions are negotiated.

In this guide, we will go through the fundamentals of creating your own real estate purchase agreement. These suggestions will assist you to navigate the drafting process, but they are not legal advice.

How to write a purchase agreement

A purchase agreement is merely a contract. This means that once signed, the language is fixed and legally binding on both the buyer and the seller. A purchase agreement should, at a minimum, include the following:

  • Buyer and seller names and contact information
  • The address of the property being sold
  •  The purchase price of the property 
  • The transfer date
  • Disclosures
  • Contingencies
  • Signatures

Simply putting all of the contingencies and disclosures in one document will not suffice when designing a purchase agreement. Consider the following contract drafting best practices to ensure you have everything covered:

  • It should be called a purchase agreement.
  • The use of "legal-sounding" terms to make the purchase appear more formal is not permitted.
  • When possible, use simple terminology. Slang, euphemisms, and idioms should be avoided.
  • Define concepts that are ambiguous. Include all important information so that there is no confusion when the purchase agreement is read.
  • When writing clear wording in a purchase agreement, specificity is essential. Any ambiguity might cause problems for everyone.



The disclosure section of a purchase agreement gives the buyer confidence that they know exactly what they are getting and that there will be no unpleasant surprises after they move in. Purchase agreements commonly include the following disclosures:

Hazards. Natural calamities such as storms and flooding pose a risk, as can poisonous materials such as asbestos and lead paint, as well as environmental issues such as the presence of industrial waste.

Association of Homeowners This is the spot to reveal if the property is governed by a Homeowners Association (HOA). Include details like where to find HOA regulations, insurance requirements, and HOA dues.

Water harm. If the basement of the property only floods in the spring but the purchase is done in the fall, a house inspection may miss it. This section should address all water-related issues.

Other disclosures may include the fact that a death has occurred on the property, known repairs that are required, and whether the home is located in a regulated historic area. In the United States, the requirements for what must be stated in a purchase agreement vary by state. As you write the agreement, make sure to check local disclosure standards. 


The "conditions" element of "terms and conditions" is contingencies. While the contingencies are outstanding, the seller may continue to promote their home to other possible buyers. If another prospective bidder makes a better or no-contingency offer, the seller might return to the original buyer to see if they will remove their stipulations or contest the new offer. The seller may potentially simply accept the new offer without being obligated to the original buyer.

The majority of contingencies are basic circumstances such as:

Approval of the loan:

 Most buyers will obtain a loan to finance the purchase of the home. If the mortgage is not authorized, the buyer will most likely be unable to purchase the home.


 A housing inspection can provide the buyer with an important assurance that the property is in good shape. If, for example, the foundation is cracked and the buyer discovers it during the home inspection, they have the option to withdraw their offer.

The buyer is selling their home:

 If the buyer plans to utilize the funds from the sale of their current property to finance a portion of their bid, they must sell it within the timeframe agreed upon.

Consult a digital purchase agreement template

Digital templates can significantly improve your drafting process. Using a template as a starting point or comparing your completed purchase agreement to a third-party contract can save you a lot of time and effort. 


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