The Top 10 things to Consider in a real estate Contract

The Top 10 things to Consider in a real estate Contract

100 Real Estate & Relocation Tips in 100 Days (Day 46)

1. Price - well, this one is pretty obvious. The object is to get the best price possible, right? Not necessarily. While price may be the most important thing to a buyer, the seller may be more concerned with the net revenue, or the least amount of loss. Both buyer and seller should understand current comparable closings, concessions made, and, when possible, the net to and from the buyer and seller.
2. Terms - by terms we generally mean the type of loan and the effect on both parties. Ifs there advantage to be gained using one type of loan over another? What are the acquisition costs of the loan and the real estate? Is the seller offering financial concessions? Is there an advantage in an owner carry back?
3. Dates and times - it may be an advantage to the seller to close quickly, but more advantageous to the buyer to close later. The convenience factor may affect both parties, and may influence price and terms.
4. Personal property inclusions-does anybody really want to move a refrigerator? The kids love the sophisticated backyard gym. All of the kids, from both sides of the transaction. The fact is, most people have an easier time negotiating over $3,000 refrigerator than a $500,000 house. We are more physiologically comfortable with $3,000 than $500,000, so it is a more meaningful negotiation.
5. Many standardized contracts have a variety of built in contingencies and protection clauses. Most of these have time limits, and they in the contract to provide the consumer with opportunities to perform due diligence. Many of these contingencies represent an opportunity to negotiate a better position for one side or the other.
6. The opportunity to determine the state of the title. Most states have title insurance, and the issuing insurance company performs due diligence on the title. However, many properties have restrictions and covenants which are excluded from the title insurance coverage, and could make a buyers life miserable if the covenants are not fully understood. BIG RED FLAG: Homeowners Associations. Read the minutes and financials before the due diligence deadline, and make sure it is OK to paint your house red, if that is what you want to do.
7. Survey-while platted property in some states many not require the completion of a survey as a condition of closing, it is probably a good idea to have one completed. It is always good to know just what you are paying for.
8. Appraisal -even if you are paying cash, order and pay for an appraisal. If you are obtaining a loan, you won't have a choice. Again, understand the costs and timing ramifications.
9. Earnest Money - most sellers want real earnest money. Just make sure the holder is independent and financially solvent, usually the title company. And make sure you understand the conditions involving the return of your earnest money if things do not work out.
10. The creator and presenter of the contract. If the presenter cannot explain the contract in a way that provides you with a clear and logical understanding of that contract, you may not want to sign your life away. And signing a contract to buy or sell real estate without fully understanding the implications of that contract is folly in the first degree.