When buying a home in , most of the home buyer’s effort is put into finding the right home. But very little thought is usually put into writing the purchase offer.
Often the real estate agent drags out a “standard purchase contract.” The truth is there is no such thing as a standard purchase contract.
However, there are many different forms printed by local or state Realtor associations, local multiple listing services, individual real estate offices and form publishing companies. State law frequently mandates some provisions in realty purchase offers, but buyers and sellers are free to negotiate additional provisions.
Avoid vague provisions
If you are presented with a printed purchase offer form by a real estate agent in to sign, consider who wrote the form. Most printed purchase offers are prepared by attorneys working for clients with vested interests, such as real estate brokers and realty trade associations.
Although it takes time, be sure to read the form before signing it. When you first start looking with an agent at homes for purchase, ask the agent for a blank copy of the purchase offer that agent uses. Then study it before making a purchase offer. If you don’t like or understand a clause, unless it is required by state law, don’t hesitate to cross it out. Just because it is printed doesn’t mean it can’t be changed.
Well-written purchase offer printed forms contain blanks for the names of the buyer, address of the property, purchase offer price, financing details and amount of the good faith earnest money deposit.
There is no rule of thumb as to how large the deposit should be. But real estate agents encourage buyers to make as large a deposit as possible, thus enhancing the probability the buyer will complete the purchase as agreed.
If your purchase offer is considerably below the seller’s asking price, a large earnest money deposit often impresses the seller into accepting a low offer. However, be sure the deposit is not to be given to the seller until the sale closes but shall be held safely beyond the seller’s control.
Well-written printed home purchase forms contain a detailed finance contingency clause. Read it extremely carefully. Be sure it says your purchase offer is contingent on both the buyer and the property qualifying for a specific mortgage.
Damage clause a good idea
Many printed purchase offers contain a liquidated damages clause. That means the exact damages would be hard to determine if the buyer defaults, so the buyer and seller agree in advance that default damages will be limited to a specified amount. This is usually a good clause for the buyer to sign because it prevents litigation.
Most home buyers want their offer contingent upon their approval of a professional inspection report on the home. Smart buyers accompany the inspector, who should be able to explain any defects discovered, their importance and estimated cost of repairs.
The purchase offer often specifies the seller is to pay for necessary repairs, up to a designated maximum amount. Additional inspection clauses may provide for termite, pest control, energy efficiency, radon, plumbing, electrical, roof and other customary reports that are subject to the buyer’s approval.
Often a home is being sold “as is.” That means the seller will not pay for any repairs. However, be sure the purchase offer specifies the seller and real estate agent have disclosed all known property defects in writing. Some states require such disclosures, whereas they are voluntary in other states. It is usually a good idea for the buyer to make the defect disclosure part of the purchase contract.
The general rule is no personal property now on the premises is included in the sale of real estate. If you want any personal property included in the sale price, such as the stove, refrigerator, washer, dryer, drapes and carpets, be sure to list them specifically even if the agent’s listing sheet says they are included.
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