Real estate is not a simple business as you may think it is. It’s a very detailed process that you have to go through before you are able to move into your potential new home. Most of it is reading and filling up tons of paperwork.
From obvious details like the address and price of the property, there are other items that you need to be aware of before you sign the purchase contract. You may know these as contingencies like financing, home inspections, closing costs, and others.
Financing Terms
This is especially important for those purchasing the property using a loan. Be sure to research the interest rates and where you are currently at in terms of your credit score or debt before drawing your purchase offer.
Know what you can and cannot afford when paying for the property and include that in your financing terms. If you are paying in cash, also include that in the contract.
Closing Costs
These are expenses above the property price that both you and the seller pay to execute the real estate deal. If you want your particular seller to pay for your closing costs, you must put that in your offer. This is known as a seller assist. This is similar to a credit wherein the seller can absorb some of the added costs.
Closing costs that you are willing to pay or you are requesting to be paid must be indicated by its amount. The amount may depend on the full purchase price of the property. It must also be indicated who pays for the closing costs.
Home Inspection
This clause is an important contingency to include because this allows you to walk away from the sale in case the property has significant flaws that would be very expensive to repair. With this, a home inspector will walk through the property to assess any damage (if any). In case your contingency contract does not come with a home inspection clause, you can check with your realtor.
Additions
If you want the property to come with fixtures and appliances, it must be indicated in the contract. Any additions must be specified so that it would be clear which items are included in the purchase. Otherwise, the property will be left bare when purchased.
Closing Date
It is a must to include the closing date in the contract. This indicates when you need to complete the purchase transaction. Common time frames can range from 30 to 60 days. Short time frames may be more difficult especially in removing the contingencies and obtaining necessary paperwork.
Bottom Line
Purchasing real estate is not just a walk in the park. You need to make sure that you fully understand everything stated in the contract. Although these are common and are mostly standardized, a good real estate agent assisting you will ensure that important contingencies that will benefit you are included in the contract.
Remember that it is alright to walk away from deals when some expectations are not met. Just make sure that you actually can walk away from it before you sign any binding contract.