Bob Northern & Company
12540 Patterson Ave
Richmond, VA 23238
Tel: 804-708-9463 • Fax: 804-708-9467
Negotiating Your Contract
What paperwork will I encounter when I make an offer to purchase?

What paperwork do I sign to buy my home and what does it mean?

Forms Needed To Purchase Real Estate

  Real Estate Purchase Agreement
The "Purchase Agreement" is what is normally referred to as the "real estate contract". It's usually a one to five page document. When a purchaser signs "the purchase agreement", they are signing an offer to purchase their new home. When the offer is presented to the seller, the seller can either "accept" the purchaser's proposal or "counter offer" back to the purchaser with a counter proposal.. When both parties to the transaction agree on all terms, there is called "a meeting of the minds". This is when the offer or counter offer becomes a "contract".

Lead Based Paint Addendum
The "Lead Based Paint Addendum" is required on any home built prior to 1978. This form puts the purchaser on notice that there is/may be lead based paint in the home. Lead was placed in the paint of all houses built prior to 1978 to help eliminate mold and mildew that would attack the paint. We all grew up in lead based paint homes and survived.

The federal government's concern is to make sure children do not ingest lead based paint and end up with physical impairments. The way most small children are exposed to the paint is by placing their hands on a window sill and then putting the fine black powdery substance in their mouth. The purchasers have the right to conduct a search or assessment of the property for lead based paint. In addition the purchasers have the right to waive the assessment of the property. Probably 99.9% of the time the purchasers waive the right to inspect the home for lead. If the home was built before 1978, obviously it's going to be there.

Residential Property Disclaimer/Disclosure Statement
The Virginia Residential Property Disclosure Act requires the owner of certain residential real property is to be sold or leased with an option to buy, to furnish to the purchaser either (a) a RESIDENTIAL PROPERTY DISCLAIMER STATEMENT stating that the owner makes no representations or warranties as to the condition of the property, except as otherwise provided in the purchase contract, or (b) a RESIDENTIAL PROPERTY DISCLOSURE STATEMENT disclosing defects in the condition of the property actually known by the owner. Certain transfers of residential property are excluded from this requirement.

Basically, the disclaimer statement says the seller is making no representations to the condition of the property, but the purchaser can go ahead and have the house inspected by a home inspector to protect himself from unknown problems.

The disclosure statement is a more detailed history of the house. It goes into detail about problems that have been incurred with the home and when the problem(s) was corrected. To me, a disclosure statement is preferable over a disclaimer statement because at least the seller attempts to tell the purchaser where problems have been in the past.

Sadly, most attorneys advise their clients to sign the disclaimer statement. The reason they give is to limit the seller's vulnerability to a lawsuit in the event the seller either intentionally forgot or innocently overlooked to make note of a problem(s) that had been encountered.

Disclosure Of Brokerage Relationship
This form is signed by both the buyer and seller in the real estate transaction. They each sign separate forms stating that they understand that the agent who does not work for them works for the opposing principal in the transaction.

First Right Of Refusal
The "First Right of Refusal" is a tool that allows a buyer to enter into a contract to purchase his new home contingent on him selling his present home.

The advantage of the first right of refusal addendum for the buyer is that it allows him to come to terms with the seller of the home he is trying to buy. It gives him the opportunity to put his present house on the market and sell it.

While the purchaser puts his home on the market for sale, the seller continues to keep his home on the market.

Another advantage to the buyer is that when a home has a first right of refusal on it, the listing agent must tell all other agents who want to show it that there is a "first right" on the property. Often potential purchasers pass on the opportunity to see the house because they are not certain that after they negotiate with the seller that they will ultimately end up with the home.

The reason this could happen is that the first purchaser who holds the first right of refusal has the option to remove the contingency of the sale of his present home and to present the seller a loan approval that is not contingent on the purchaser having to sell his present home in order to close on his new home.

Usually in this agreement, the buyer is given a 24 or 48 hour period of time to remove this contingency and to provide the non-contingent loan approval to the seller. The down side to the buyer is that he can lose his new home because someone else was able to give the seller a contract that did not include the necessity of selling a home

The advantage of the first right of refusal to the seller is that they can have their cake and eat it too. The seller is able to keep his home on the market to attract another buyer. If another buyer signs a contract, and they don't have a home to sell, they can very likely buy the house because more than likely the first buyer will not be able to remove the contingency of selling their home. Based on the first buyer not being able to perform based on the first right of refusal contingency, the seller will be able to void the contract with the previous buyer and proceed with the second buyer.