- The Washington Times - Wednesday, May 18, 2005

In contracts, it’s all about the bottom line: the terms; how much the seller will net, or will have to bring to the table in some instances; the closing costs for the buyer; and who’s paying for what.

A lot is happening at the closing, and it’s important that the little things have been taken care of.

When your Realtor writes or presents your contract, it’s imperative that he or she pay attention to detail. A lot can happen to the buyer or seller if a box is checked or left unchecked, an addendum is left out, or something required of the contract is not completed.

The little items on a contract can cost you a lot of money or sabotage your contract altogether if not handled properly.

Especially in a competitive situation, the listing agent is looking for reasons to reject a contract as much as reasons to keep that one that’s going to be the win-win scenario for his client.

The little items might make the difference in accepting or rejecting your offer. Even if you’re proposing more money, the terms may stop your offer dead in its tracks. Here are some of the “small” items that I’m talking about that can cause of lot of headaches or even kill your contract if not handled well.

m Inspections. There are various inspections that buyers can request, but in a hot market, they may deal them away. The request is usually as simple as a check box.

Make sure your agent has the right box checked, “yes” or “no.” I’ve seen some contracts where the agent/buyer apparently believed that because they didn’t want an inspection, then it was OK to leave a “no” box blank. Not so. Sellers want to leave nothing to the imagination and want you to say “no” if you’re not requesting a pest, termite, home or environmental inspection.

m Disclosures. These are required by federal, state or local law. The consumer will be asked to sign a lot of forms that have nothing to do with the transaction as far as commitment is concerned, just forms designating that you’ve been told something: property disclosure, Real Estate Settlement Procedures Act disclosure, agency disclosure, federal lead-based paint disclosure, disclosure of brokerage relationship and property owners/condo owners association disclosures are just a few of the disclosures that you might be required to sign. Leaving them unsigned could come back to haunt you later.

m Other terms or clauses. Escalation, home of choice, rent-back clauses — these are clauses that you definitely want to nail down early in the contract. If you’re escalating your offer, what’s your top price? You might say you’ll outbid any other offer by $2,500, but you don’t specify a limit — then you may end up escalating far beyond your buying power. Don’t assume “it will never escalate that high,” because you just don’t know.

Nothing is new in the contract-writing arena. More than likely, other buyers are just as hungry for the house as you, and they could have more cash in the bank.

If you don’t want to go homeless after the sale, then stipulate in your listing agreement that you want to find a home of choice and that you may want to rent back from the buyer so that you have time to find your home of choice.

In a seller’s market, don’t assume you’ll find your next house in a couple of weeks. Be smart and stipulate to the buyer that you need time. Keep in mind, however, that you need to be careful about how long you need to rent back. Most purchasers will be able to hang onto their mortgage rate for only 60 days.

Don’t wait until the day before you actually write a contract to sit and read it over. Get to know this document ahead of time.

There’s no good reason for not knowing what it says and what it may require of you before you actually have to submit it. Discuss with your Realtor the approach you want to take, so at the contract writing, you’re not handling emotions that should have been dealt with weeks ahead of time.

M. Anthony Carr has written about real estate since 1989. He is the author of “Real Estate Investing Made Simple.” Post questions or comments at his Web log (https://commonsenserealestate.blogspot.com).

LOAD COMMENTS ()

 

Click to Read More

Click to Hide