Take time to get right contract with right clauses
Cold feet, nerves and hearing “alarm bells” are natural reactions to putting your autograph on the dotted line. Natural but not necessary. By knowing the ins and outs, you can save yourself some sleepless nights.
Understand that the work to create an offer is a process. The first time you sign to an offer sheet, you should — logically — feel very little pressure, whether you’re a buyer or a seller.
Let’s look at the buyer side in detail first. The first step of the process is agreeing upon a price. You shouldn’t need to worry about the condition of the home, your financing, how close the schools are and like items, when you’re putting in an offer. Ideally you’re already aware of your financial standing as well as issues like proximity to schools and transit.
The condition of the home is the next hurdle. Your offer should be conditional on, at the very least, financing and a home inspection.
The financing clause stipulates that you are agreeing to purchase the property at the price set out so long as you’re able to arrange a satisfactory mortgage. In other words, if you can’t afford the place, you’re not bound to it. The home inspection clause, similarly, protects your offer. The clause should indicate that you agree to purchase at that price so long as the home checks out fine, and if there are any issues that you refuse to accept and the seller refuses to fix, you reserve the option of walking away. These clauses are not granted nor guaranteed; they must be included in your offer to protect you.
From the seller’s perspective other factors must be taken into account, such as a suitable closing date and acceptable conditional period (the time between the acceptance of the offer and the date by which all clauses must be satisfied). However, “escape clauses” are, normally, unnecessary. The process for the seller involves: signing to a suitable offer; working with the potential buyer to have the conditions satisfied while, ideally, continuing to show the home in case the offer falls through; and acknowledging that conditions have been met and that the deal is final.
The main point to understand, as a buyer, is you have the time you want/ need (so long as you’re represented appropriately), to ensure that you know exactly what you’re getting into. For the seller, you should realize that a suitable price is only half the battle. Until the conditions have been fulfilled, you should hold off on the champagne.
Happy Hunting!
There is much more to discuss regarding the offer process that goes beyond the confines of this space (such as deposit matters, special conditions, comparing multiple offers, etc). If you have any specific questions feel free to e-mail me at ap@realtyintel.com. You can also visit www.realtyintel.comfor tons of free info.
