Purchase Agreement Fee Definition

A purchase agreement fee is a fee charged by a seller to a buyer for the privilege of entering into a purchase agreement. This fee is typically non-refundable and is paid at the time that the purchase agreement is signed.

The purchase agreement fee is also known as an earnest money deposit or a trust money deposit. This fee is designed to provide the seller with some assurance that the buyer is serious about purchasing the property, as the fee represents a financial commitment on the part of the buyer.

The amount of the purchase agreement fee can vary, depending on the type of property being purchased and the specific terms of the agreement. Typically, the fee will be a percentage of the purchase price, with a minimum amount set by the seller.

It is important to note that the purchase agreement fee is not the same as a down payment. A down payment is a larger payment that is made at the time of closing, and is designed to be a percentage of the total purchase price. The purchase agreement fee, on the other hand, is a smaller fee that is paid upfront and is designed to secure the buyer’s commitment to the sale.

If the sale is successful, the purchase agreement fee will be applied towards the final purchase price. If the sale falls through, the fee may be forfeited to the seller, depending on the terms of the agreement.

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