What happens after a buyer and seller agree on a price?
It is common for the buyer and seller to complete a "binder". This is either an outline of the proposed sales contract between the buyer and seller or the contract itself. It includes:
(1) the property address
(2) the names of the parties involved (the buyer and seller)
(3) the purchase price, and proposed financing
(4) what will happen if the buyer can't get a mortgage, or if inspection reveals serious problems with the house
It is most often accompanied by a deposit from the buyer - usually $500 or 1% of the purchase price of the house. It is mostly used as a show of good faith between parties. Depending on the wording of the binder, it may or may not give either party the right to sue for breach of contract, or create a forfeiture of deposit. Often, however, the parties proceed to a formal written purchase agreement that contains all of the terms and conditions of the purchase.
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