Purchase Agreement Basics | Freedom Vlog | The Freedom Show | EP. 109

Foreign.

Hi, guys. Welcome back to our Freedom vlog. This is vlog number 109. Today I'm here with Tiffany Biddle, our transaction coordinator. How are you doing today?

I'm good. We're both a little sweaty.

Yeah.

Trying to set up this camera and this whole system and. Yeah. Allergies, definitely.

Sick with the Canadian fires. The whole office you just hear sneezing, coughing, sniffling, the whole nine yards.

We're not in New York City, so we feel for anybody there, but our haze has just been at most, it's.

A slight inconvenience to the allergies. Yes, yes, definitely. So today we're going to be talking about a purchase agreement. So my first question for you today on this vlog is what is a purchase agreement?

Yeah, good question. So purchase agreement, it is legally binding document and it outlines everything, terms of a sale. So if you're buying a property, this is going to have, you know, your property address, your name of the buyer, name of the seller, the legal names that you want or that are, you know, the title is taken under the closing date. You know, any, just anything that you want included in that sale is going to be in that purchase agreement. Okay. Yeah.

Okay, that makes sense.

Yeah. Cool.

What are the essential steps in, in the purchase agreement?

Yeah, so when we're filling one out, you know, there's different things that we're going to include. If we are filling one out for somebody buying a property from us, then we're going to include, you know, the names of the buyer and seller, the description of the property, so the property address, as well as the parcel numbers. Sometimes the parcels are split up very weird, and your house may sit on two lots. Well, we're going to include both of those parcels because you don't want somebody else to own half of your house. Right. The, you know, we're going to include the purchase price. Is there any earnest money? How is that purchase? How is, how is that price take. How is that per. I'm, I don't know what I'm trying to say here, but how is that purchase handled? You know, are you are using financing, are you using cash? And then, you know, any, any payment terms like, you know, there's going to be. Sometimes there's, you know, we don't really do this very much, but sometimes there's like seller financing or there's, you know, something different that is handled. We, we typically do like a traditional loan or traditional cash sale, but there are all of those options. We will include things like dates of inspection, timelines, so on our purchase agreements, typically you're going to see seven days to inspect. In three days, I believe it's three days to remedy. So if you're buying like a retail deal off the mls, then you're, you're going to be able to set that on your own. And that's something that typically gets countered back and forth. Typically you go high like I want 20 days to inspect and your seller is going to say you get five. Oh, you know, and that's kind of thing to play with there. But ours, it just says seven days. We don't really plug that in. It's just already in that contract. Any warranties or guarantees that you might have, sometimes those might be on the actual purchase agreement, sometimes they might be on a separate addendum. And an addendum is becomes a part of that legally binding contract. So when you sign that, it becomes a part of that and it may override something that's in the contract. I'm sure we'll get into that more in the podcast. But yeah, it can contain a purchase addendum as well. But those are kind of the. I think I kind of.

Can you explain what earnest money is and then after that explain an addendum just so like I understand the terms.

Yeah, yeah. So earnest money is, it's basically in I think the simplest terms, it's what shows that you're serious about this purchase. Like anybody can sign a contract and then later on just be like, oh, you know what, I don't want it anymore. Earnest money shows the seller that you're serious. So if you're going to buy a home off the mls, because I just. They're all kind of the same. Right. So if you're going to buy a home off the mls, that seller wants to know that you're serious. So if you're going to say I'm going to put $2,000 down as earnest money so that you know I'm serious about this deal and somebody else comes in and says I'm going to put $100 down. Oh, everything else is the same. What are you going to go with? You're going to go with the one that put more money down because they're more invested in that deal. Right. So that's kind of how I think of earnest money. It can be refunded to you. It's typically not a non refundable earnest money. So if you are severely in breach of contract for something, you know, and you've decided to cancel it for whatever reason, then it can go to the seller, but you have to sign off on that. So we can't just. Title company can't just say, yep, you know what? You don't. You don't get your earnest money back and send it to the seller. Everyone has to sign off on that. Otherwise it sits at the title company. Right. And eventually probably makes its way back to you. But it costs them a lot of money, so we don't usually make them do that. So it comes back to one or the other party, and seller has to sign off for it to go back to you as well. So that's just kind of how that. Yeah, so that's what earnest money is. It's just a deposit, you know, but it shows that you're serious about that.

Makes sense.

What about an addendum? So an addendum is just a separate document that is kind of supplemental to the contract. So say something that happens often might be like our freedom warranty. Our contract has some. It has some legal wording in there. Right. It was created by an attorney or reviewed by an attorney, at least, I'm not totally sure which. So I might be wrong there. But there was an attorney involved and there were some things that we have to put in the contracts. One of those, I believe it's a state thing that has to say as is with no warranties. But we have a freedom warranty. Right, Right. So we have a separate addendum that outlines that. And that is a very confusing thing, and a lot of people have questions about that. The addendum overrides something that's in the contract. Gotcha. So if it can't be changed in the contract, the addendum would override that. And it's just a separate document. You might get like a closing date change. Say you're going to close July 1st, and then all of a sudden you're going to close July 15th. Well, we're going to send you an addendum that says closing to be July 15. That overrides July 1 is in the contract.

Okay, very interesting.

So it stays with the contract. It lives with it forever.

Right? Yeah, I've been hearing that stuff every single meeting. I'm like, okay, yeah, I never understood. That's awesome.

It's fine. When I started, I didn't understand it either. So it's all good.

Cool. My last question for you is, do you have any interesting stories you could share about a purchase agreement in the past or what we've had to go.

Through so I can share an interesting story about the process? So there are many different ways to get a purchase agreement signed. To get any kind of paperwork signed. We use dotloop. It's an electronic signature service. It's fantastic in the sense that all you have to do is kind of click, click, click and click. You should read what you're clicking and signing, obviously, but you don't have to sign your name over and over and over and over again. Right. So for me, that's great because I write authorized signer. Because I sign on behalf of the llc. I do not love writing that over and over again. I just click, click, click. So we use dot loop, and it is a. Sometimes a headache. You should hope that when you're getting a purchase agreement from us that Carla is preparing it and not me. Carla is fantastic at catching the things that I miss. One of the things being we might share the documents to you at the same time that we share them to our listing agent. And we might put. There's one little button you can put that says that they can sign or they can edit in private. It automatically puts edit in private. So our listing agents will steal our documents all the time. Not meaning to, but they're just going in and they sign it. And they don't hit a button that shares it back or they can't find it because it's very confusing. I seriously mean that. It's very confusing to figure out where to share that back to and how to whatever. And so it'll lock everyone out of whatever that document is. So we've had that happen multiple times. And then I have to go and lock that listing agent out re share it to them. It's a little crazy.

Unintentional fraud.

Yeah, yeah, it's unintentional fraud just taking our documents away from us. Yeah, it's. It can get a little crazy. So we try to be very diligent about checking that. I'm not always the best. I sent out a few purchase agreements when Carla was out on vacation last week, I believe, and I locked myself out of multiple documents because I just. Luckily, I didn't lock anybody out that was signing it besides myself. But it was frustrating on my end because I was trying to sign stuff, but it's okay. And. Yeah, so dot loop. It's a little bit of a headache. You also. We found out you can't change, so you create a loop in dot loop. That's what it's called. It's just a loop where all of your documents go for that one property. So we'll name it 123 Main Street.

Yeah.

Okay. Well, one time, Carla. Carla created all the documents for 123 Main street when the request was actually for 5678 South street right. And she shares them to me. And I said. I said it was supposed to be for 5678 South street right. And she's like. So she goes through and she changes everything. She changes the address, the parcel number, you know, the purchase price, everything. And then she just renames the loop to 5678 South street on our end. It looks great, right?

Yeah.

So then we share it. We share that off to the buyer, and they said, this says it's for 123 Main Street. No. So apparently, you cannot just rename a loop. And we've been doing that for years. Not years. Months. Months. Probably since we. Since we started using dot loop. Probably. I don't know, maybe a couple years. But we've just been renaming loops like it's no big deal. And no one's ever said anything to us until just a few weeks ago or a couple months ago, and somebody said, that's not for the right property. I'm like, oh, man. So I had to go in. I mean, it was like. I want to say it was 9pm on a Friday, and I'm like, oh, no. So I'm like, remaking a whole loop and putting all the documents in there so I can get this out to the buyer in the corrected loop. And, yeah, it's a whole thing.

I think being in real estate teaches you some patience and flexibility.

Flexibility.

Adaptability. I have a little sign in my office that says that.

Yes.

So it's a good reminder every day to just be patient with yourself, be patient with others, because hiccups happen all the time. And I think, you know, our work culture, our work environment has made it to where we learn from our mistakes, but we're not just penalized for every single.

Every single time.

You know, everyone's really patient to work with, too.

Technology. I mean, it's its own headache, you know? So, like, when technology screws up, you just have to laugh. Like, you can't.

Yeah, there's nothing.

You know, and, like, Carla spent all that time renaming everything for it to just be like, nope. You know, it's so. Bless her heart. It was just so funny because I was like. I told her on Monday when we came back, like, apparently we can't just rename loops like we've been doing for however long now. We just have to recreate new loops all the time. But, yeah, so technology dot loop is great but it does fail us sometimes and it's okay. We're just. Yeah, like you said, patient, flexible, patient. We adapt to what we need.

That describes everyone's job here.

Yes, absolutely.

We do our best self. But thank you so much. Are any last thoughts you want to share about purchase agreements or anything like that?

Nope. I think we'll cover more on the podcast when we come back to that.

So yes, like she said, we're going to have a podcast about this so this a reminder. This was vlog number 109 and we always end these with invest smart, live happy.

Bye guys. Bye.

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