What is a "purchase agreement"?

A purchase agreement is a legally binding contract between a buyer and a seller that outlines the terms of the sale of real estate. This contract includes essential details such as the purchase price, the property being sold, the closing date, contingencies (like financing and inspection), and any other specific terms agreed upon by both parties. The primary purpose of a purchase agreement is to protect the interests of both the buyer and the seller, ensuring that all conditions are clearly set forth and agreed upon before the transaction is completed.

This formal documentation is crucial in real estate transactions because it provides a clear framework for the sale, minimizing the potential for disputes or misunderstandings between the parties involved. Without such a formal agreement, the transaction may lack clarity, leading to complications or legal issues later on.

In contrast, the other options describe agreements or documents that do not fulfill the legal requirements or functions of a purchase agreement. Informal arrangements, property value assessments, and listing agreements serve different purposes within the real estate process and are not considered legally binding contracts for the sale of property.