Ingredients Of A Winning Contract For Homebuyers

Homebuyers should take the time to research and gather information before presenting a purchase contract. Property sellers will be receptive to your proposal when you present them with the customary supporting documents with the contract. Real estate contracts contain many blanks that can be balanced against each other adding up to a strong offer. Knowing which supporting information and the typical numbers for the blanks will save you time and could save you dollars.

Mark Nash author of 1001 Tips for Buying and Selling a Home offers you the ingredients for constructing a purchase contract.

-Use an approved real estate contract by your state real estate attorney association or local Board of Realtors®.

-Retain an attorney to review all real estate contracts before they are submitted and after acceptance.

-Real estate contract. A binding agreement between buyer and seller. It consists of an offer and an acceptance as well as consideration (i.e. money).

-Acceptance. Agreement by the parties of the terms of a contract.

-Contract length. Research customary contract lengths, the standard is 45 days from contract to closing.

-Research sold comparable properties to the one you are writing a contract for.

-Comparable. Closed prices for similar homes in age, condition, location and size.

-Price. Study average sold prices as a percentage of lists in the last six months.

-Low-ball offers. Offer over 87% of list if you serious, otherwise you will alienate the seller early on in negotiations.

-Counteroffer(s). The response to an offer or a bid by the seller or buyer after the original offer or bid. Request all counteroffers to be in writing.

-Apply for highest level of mortgage commitment to present with contract.

-Mortgage Commitment. A document by a mortgage lender that commits the lender to providing a loan at agreed terms and conditions.

-Mortgage term, rate and amount. Your strongest down payment will provide negotiating leverage.

-Cash offers in lieu of mortgage financing should be confirmed with a letter from your financial institution stating funds are on deposit to close the contract.

-Federal law requires Lead-Based Paint Hazard disclosures.

-Lead-Based Hazard. A disclosure of reports or knowledge of Lead-Based Hazards. Buildings built after 1978 do not present Lead-Based Hazards.

-Read Protect Your Family From Lead in Your Home by the US EPA.

-Real property disclosures. Written statements by the seller(s) of a property disclosing any known defects.

-Local disclosures. Local requirements of disclosure that the seller provides and the buyer acknowledges, such as certificates of occupancy.

-W-9 form. An IRS form requesting taxpayer identification and certification numbers of buyers to receive interest on earnest money from delivery to closing.

-Subject to appraisal. All contracts should be subject to an appraisal at a minimum of contract price.

-Appraisal. An objective third parties opinion of value by a licensed or certified appraiser.

-Earnest money deposit. Money given to the seller at the time the offer is made as a sign of the buyer’s good faith.

-Research customary earnest money deposits as they vary. The larger the deposit, the increased motivation you show to perform the contract.

-Refund of earnest money deposits. Contracts should provide for refund of the entire earnest money deposit within agreed contingency periods.

-Attorney approval period. Your attorney reviews and makes changes to the contract, typically 5-7 business days.

-Property inspection period. The right under a contract for the buyer at their expense to discover the actual condition of the property. This period typically runs 5-7 business days.

-Well and septic inspections. These are independent of structural and mechanical inspections.

-Timelines for contingencies run concurrently.

-Contingency. A provision in a contract requiring certain acts to be completed before the contract is binding.

-Closing/ escrow date. The date of the end of the transaction process where the deed is delivered, documents are signed, and funds are dispersed.

-Possession date. The date agreed by contract when the buyer can occupy the property.

-Final walk-through. A property tour before closing or escrow that permits the buyers one final verification of condition, agreed repairs and personal property.

-Tax pro-rations. The amount of credit given to buyers at closing for unpaid property taxes, when taxes are paid in arrears. Pro rations should always be more than 100 %.

-Personal property. List and initial all personal property included with the sal, such as air-conditioners, appliances, and playground equipment.

-Home sale contingency. The contract is contingent on the sales of the buyer’s property.

-Show motivation when including a home sale contingency by having your current property on market.

-Home closing contingency. The contract is contingent only on the successful closing of an existing real estate contract.

-Letter to sellers. The best way for you to personalize your interest in a property and present your family to the sellers.

Mark Nash's fourth real estate book, "1001 Tips for Buying and Selling a Home" (2005), and working as a real estate broker in Chicago are the foundation for his consumer-centric real estate perspective which has been featured on ABC-TV, CBS The Early Show, Bloomberg TV, CNN-TV, Chicago Sun Times & Tribune, Fidelity Investor’s Weekly, Dow Jones Market Watch, MSNBC.com, The New York Times, Realty Times, Universal Press Syndicate and USA Today.