You have found it... your dream house! You want to buy it. Now what? You make an offer by submitting a signed real estate offer to purchase with the type of financing you desire.
This will be the sales contract once the seller accepts. When you and the seller sign, you are agreeing to the contract conditions. Before you sign it, read it carefully and make sure you understand every detail. Ask questions. Verbal agreements should be written into the contract. If you plan to have a lawyer represent or advise you, retain one as early as possible. This is where Miguel Avila and an attorney can give you the assistance you need.
Here are some things to keep in mind:
Offers and Counter OffersWhen you sign the offer to buy, you also will have to submit a deposit to show that you are earnest about your desire to buy, appropriately called earnest money.
Making Sure Your Contract Is CompleteDeposit - The amount of earnest money should be clearly stated, plus the amount of money you will be paying at settlement and your sources of financing. A common purchase deposit in many areas is 1-2% of the purchase price, deposited in escrow.
Contingency on Financing - Be specific about the total loan amount, the date a second or third mortgage is due, and the exact financing terms. Many contracts have an alternative financing clause that allows buyers to accept different financing than that which is written in the contract, as long as it does not affect sellers net proceeds.
Contingency on Inspection - You may make the contract contingent on a building inspection report. You will usually have to pay for this inspection, but the peace of mind or detection of a problem is well worth the cost of inspecting.
Termites - The contract may require the seller or buyer, depending upon the area, to pay for a termite inspection. The results of this inspection may further require payment for removal of the infestation and repair of any damages from the infestation. You should get a written report at settlement indicating that the property is free and clear of any active termite infestation. In some areas, well and septic certificates are also required.
Personal Property - Light fixtures, drapery rods, chandeliers, washers, dryers, refrigerators, heating oil in the tank, storm windows and doors, firewood, even swimming pool chemicals, and other items not physically attached should be specified in writing if they have to be conveyed to the buyer. Misunderstandings based on verbal agreements can delay settlement - as well as cause friction.
Repair Work - Standard contracts of sale require sellers to be responsible for plumbing, heating, mechanical, and electrical systems to be in working order at time of settlement. You should conduct a pre-settlement walk-through inspection which should be made several days before or no later than the day of settlement.
Title Attorney or Insurance Company - The buyer has the right to select a title attorney or insurance company. You should shop and compare prices before deciding what attorney or title company will conduct your settlement. Also, be sure to clear the title company with the lender, whose interests are also involved. Ask me for a list of partners, who provide settlement and insurance services throughout our region. To see what some of the things Title Insurance protects you against.
Closing and Occupancy Date - Include an arrangement with the seller in the event you can not secure possession on the agreed date, such as a daily rent-back agreement for post-settlement occupancy.
Next to Offers and Contract walks you through the contract and negotiation process.
