Buying a Home? What should be in your Contract?
You’ve finally found your dream home and are all set to purchase it, but now comes the dreadful part…PAPERWORK!
When it comes to real estate contracts it can get overwhelming and it’s tempting to simply go along with whatever is in print. However, there are some conditions that I strongly recommend you include in your contract(s).
First and foremost, include FINANCE TERMS. If you need to take a mortgage in order to purchase your new dream home, you should state that your purchase offer is is contingent upon obtaining financing at a specified interest rate. Be sure to do some research ahead of time and figure out which interest rate is most ideal and realistic, and then you’ll want to get pre-approved for a mortgage.
If you are obtaining a certain type of loan to complete the deal, or even if you’re paying all cash, you should state it in your contract. If you’re paying all cash this is more attractive to a seller because the payment is more likely to go though by the deadline.
Next, CLOSING COSTS. If you want the seller to pay for the closing costs you must ask up front! Your offer should state the closing costs requested in dollar amount or as a percentage of the home's purchase price.
Who’s going to pay specific closing costs? State in your agreement if the buyer or seller will be handling certain fees (escrow, title search, title insurance, notary, recording, transfer tax, etc.). Each location is different, so, it may be best to ask your real estate agent who customarily pays each of the fees. In Florida, for example, it is customary that the seller pays the costs associated with presenting good and marketable title, free of liens, to buyer, and buyer pays for most other costs.
Moving on to HOME INSPECTION. As a homebuyer, it is absolutely vital to include a home inspection contingency in your offer. If there are any significant problems with the home during your home inspection, you can simply walk away from the deal without a hassle. Without this clause, you could be stuck with a deal and a high cost associated with a repair.
You shouldn’t ever rely on a verbal agreement, and FIXTURES AND APPLIANCES are no exception. If you are interested in keeping the current appliances (i.e. the refrigerator), and the seller has agreed, include it in your contract. A written agreement is more reliable than a verbal one.
When will you be closing the deal? Figure out the time needed to complete the purchase transaction and set a CLOSING DATE. Why is this important? You want to make sure you and the seller are on the same page because issues can arise if you don’t have a set date. Some of these issues could include the buyer’s remaining term on a lease, seller’s need to find a new home, relocation for a job, etc. Typically, it takes 30-60 days to complete a purchase transaction.
Are you selling a home and using that money towards the new one you’re interested in? If so, include a contingency in your contract for the SALE OF EXISTING HOME. You’ll need to provide reasonable time frame for you to sell your home (30-60 days); the seller won’t want to take their home off the market if you don’t have a reasonable time frame to offer them.
There are standard forms approved by the Florida Bar commonly used by licensed real estate agents use that will work perfectly fine for you. However, you may want to consider including these conditions if you don’t already see them listed.
If you have any questions about the contents of this blog, be sure to speak with your licensed real estate agent, or Contact Us.