What you need to know before signing a contract
Updated: Aug 24, 2021
So you are ready to sell or buy a home,
What is (or not) in the contract can make the transactional experience a pleasant or painful experience. Make sure you act upon the following points before signing a Contract for Sale agreement.
Everything in a Real Estate transaction is negotiable, there are not necessarily designated buyer or seller closing costs. When selling, try to get the Buyer to pay as many of these costs as possible. If Selling to an investor, have them pay ALL the closing costs.
As a Buyer, use selling costs to leverage a price reduction of the home asking price. Many times the Seller will provide concessions several times greater than the itemized value of each selling costs.
The market value, by definition, is the price a Buyer is willing to pay and the Seller is willing to sell. This is a very open ended definition, so let's look at what this really means.
There are different types of Buyers: Retail, Landlord, Rehabber, and Wholesaler. A retail buyer is someone who will live in the home after purchase; a Landlord will rent the property to a tenant; Rehabber will need to purchase the property at the ARV (After Repair Value), less rehabilitation costs and profit margin; and a Wholesaler will make an offer to place a home under contract at the same price as any the above described purchasers, less their fee. Each buyer provides a service, depending upon the seller's needs. A savvy Real Estate Consultant, Investor or Realtor should be able to determine the expected price point for each type of buyer, respectful of the current market conditions, the location and condition of your home.
There are an unlimited combination of terms, such as: length of contract before closing, inspection period, how the home will be paid or financed, conditional selling or buying another home, lease option, contingency and down payments, refund options, and as-is purchase versus repairs, to name a few.
As a home purchaser, insist upon all inspection items to be repaired by an authorized contractor and ask for copies of receipts. Many times contractors will provide warranties for work performed if you have a copy of the receipt regardless of ownership.
As a seller, negotiate the value of repairs from the asking price, and only make repairs required by a lender. In the case of an investor (Landlord, Rehabber, or Wholesaler) purchaser, sell the home as-is, at a price that adjusts for repairs.
As a Buyer, you should be pre-qualified before making an offer on a home. Consult your bank or a mortgage lender how to become pre-qualified. This will help gage the price range of the home you should be shopping for, and get you into your dream home that much faster.
As a Seller, it is tempting to accept offers from any willing buyer. Resist this temptation, do not accept offers from retail purchasers unless they have been pre-qualified; it will greatly shorten the transactional period and get you to the closing table sooner. Too many times have sellers lost qualified buyers while waiting for unqualified buyers secure a failed loan.
If a cash buyer or investor is making an offer, insist upon a "proof-of-funds" letter. This letter is issued by a bank official verifying that the investor has the funds to make a cash offer. The latter will also protect you from dealing with an inexperienced Wholesaler.
Note: most Wholesalers do not purchase your property. Rather they assign the contract to a qualified buyer for a fee. Wholesalers do offer a valuable service, especially when time is of the essence.
Volumes have been written about Real Estate Contracts. The above highlights a few critical items to consider before signing a contract to sell or buy a home. Employ these tactics before signing a contract, and your sale will be much more successful. For these and other tips, consultation, or home sale, contact Trinity Oasis Home Solutions.
#signingacontract #sellingyourhome #buyingahome #webuyhouses