So you finally found a property and are ready to officially make an offer. Your real estate agent writes up the offer and sends it over for you to sign.
Your next thought is likely...... “Wait….what the hell am I looking at?”
You’ve done the proper analysis to find a good home – to make sure you buy right, but let’s not make any mistakes when it comes to the contract.
If you missed the past posts on buying right, getting a loan and others, you can find them here:
Buying Right, Property Calculator, Prequal for a Loan, Finding Good Real Estate Agent
Items to Know on a Sales Contract
Let me first say, technically the entire contract is important.
But there are a few specific items you should absolutely understand.
I will use parts of an actual sales contract from one of my offers as an example
(Note: This is a Florida sales contract, there are subtle differences state to state)
Price & Deposit Obligations
This is the very first page. You will have the name of the seller and the name of the buyer (you) listed along with the price you are offering and the deposit amounts.
Further down the page (as seen below) we have....
When the deposit(s) are due if the offer is accepted and how much
- Three days in this case.
- It can be one deposit or two. In this case we listed one $5k deposit as seen in line 2(a).
Time for acceptance:
- This is the date the seller has till to accept your offer or it expires. (see bold line 3)
- This is important because you can’t leave an offer sitting out forever, you want to move on to the next property if this deal isn’t going to happen.
Closing Date
- Last you see the closing date (bold line 4) Make sure it is a date you can physically make.
Financing Contingency
This is further down the contract and tells the seller whether you are paying cash or using financing. When using financing it is vital you select as the deal becomes contingent on it. If your financing falls through, you are off the hook and your deposit is returned. Otherwise you would lose it.
In the example below we went cash as it was a bank owned foreclosure only accepting cash offers.
Inspection
This is the most important item on the contract in my opinion
- This gives you the right to inspect the property for X number of days after our offer is accepted.
Inspection is basically our other key contingency. After inspection, we can either renegotiate with the seller if we found items in need of repair or we can simply walk away if we are not satisfied with the property's condition.
A buyer would have to provide written notice within the allocated inspection period to the seller that they no longer will purchase the property is that was the case.
In the example above we did a 10-day inspection period, but you will see 7 days more often. 7 is the minimum I would do because it will take atleast a few days to get an inspector to the property.
Now We Are Ready to Submit That Offer!
There are so many additional items within the contract, but as long as we are on point with the ones mentioned above we should be in good shape.
Sales contracts are legally binding documents, the above info is for informational purpose only.
Regards,
Your ScaredyCatGuide
@scaredycatguide
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