What is a purchase agreement?

A purchase agreement is a formal and legally binding document that outlines the specific terms and conditions under which a property is being bought and sold. This includes important elements such as the purchase price, deposit amount, financing details, contingencies, and any conditions that must be met prior to closing. The purchase agreement acts as a roadmap for both the buyer and seller, ensuring that both parties understand their rights and obligations in the transaction.

The other options do not accurately capture the nature of a purchase agreement. While an informal conversation may involve discussing terms, it does not constitute a binding agreement. A written offer made by a buyer is part of the negotiation process, but it becomes a purchase agreement only when both parties formally accept and sign it. A financial statement for taxes, while important in property transactions, is unrelated to the actual agreement to buy or sell a property. Therefore, recognizing a purchase agreement as a detailed document that outlines the essential terms of a real estate transaction is crucial for understanding the role it plays in the buying and selling process.