“Owning a home is a keystone of wealth – both financial affluence and emotional security.” – Suze Orman. Making a purchase offer for the property you’d wish to make “yours” is a crucial step. After all, it includes all the crucial details about the transfer of ownership. The obvious details are:
- Name of both the parties,
- Property description
- Condition of the property
- Purchase price
- Date of closing, and
- Signature of both parties.
In addition to these, the document includes some conditions (also known as contingencies) that must be satisfied before closing the sale. These are the vital elements of the purchase offer.
It is because contingencies allow the buyer to cancel the contract without penalty. Moreover, they don’t have to face any trouble to get back the earnest money deposit. Furthermore, it also ensures that the sale works smoothly and doesn’t cause any issues in the later stages.
Having said that, let’s learn what the “Must-have” conditions that you should include in the contract are.
The first and foremost conditions that you need to include in the contract are related to the finances. Generally, most people are not financially secure to make an “All-cash” offer; they need to take out a mortgage. If you are also one of them, then you need to provide this information into the contract.
Nonetheless, before you do the same, you need to do some research. You need to learn about the interest rates in Edmonton, as well as your existing debt and credit score. It is a very crucial point to take into consideration. The reason is that your purchase offer will include information about obtaining financing at a specific rate of interest.
If you have added an interest rate of more than what you can afford to pay, you will lose the earnest money deposit if and when you wish to cancel the deal. In addition to this, you also need to specify what type of loan you borrowed to complete the deal.
In case you are financially stable and making all-cash offers, make sure that the offer is very attractive. It’ll help in closing the deal on time.
If you want the seller to contribute to the closing costs, you should include it in the offer. Closing costs are the general expenses (excluding the property price) that both the parties, i.e., buyer and seller, have to pay before finalizing the deal. By adding seller assist contingency in the agreement, you ask the seller to pay some of the expenses.
Perhaps, you might be wondering- “why would a seller pay expenses to sell the property?” Well, it might look strange, but generally, the seller accepts the request. Nonetheless, the settlement or closing costs totally depend upon knowledge and negotiation skills. Therefore, it’d be better to learn more about real estate law edmonton as well as contact a lawyer who can help you draft the agreement. It’ll ensure that the contract is made in the best interest of both parties.
Note: The offer should include the closing costs you are requesting as a percentage of the property’s purchase price or as a dollar amount such as 7000 dollars. Also, if you want, you can offer a little extra property price in exchange for the seller to pay closing costs.
A home inspection is a crucial part of the property transaction; thus, you must include it in the contract. It’ll give you the right to cancel the deal if the home inspection reveals “expensive-to-repair” damage or a significant issue with the property’s structure.
Usually, different states and cities have different laws when it comes to home inspection. Nonetheless, the basic procedure is that a home inspector will walk through the house and examine any possible defects or damages. In addition to this, they might also check the electrical system, plumbing, roof and HVAC.
If they discover something which needs an expensive repair, let’s say the roof needs to be replaced and will cost at least 12,000 dollars — in such a scenario, having home inspection conditions will come in handy, as you can walk away from the deal. However, in some cases, the seller may willingly offer to repair or reduce the purchase price. So, before you cancel the deal, communicate with the seller to find the best possible solution.
Fixture and Appliances
Suppose the seller agreed to add extra furniture and appliances such as a refrigerator, dishwasher, stove, oven, or washing machine in the house before you move. In that case, you must add this in the contingencies as well. Do not rely on the verbal agreement, as it will be of no use if the seller disagrees at the last minute.
Written and signed documents can be used to hold the seller liable for non-compliance with the terms and conditions. It’ll help you protect yourself from any future troubles. Moreover, the seller will be legally bound to follow the clause. Otherwise, you can sue the seller and cancel the sale.
Besides these, if you have any requirements, you must include them in the purchase agreement.
Sale of Existing Home
In case you are selling your existing house in order to finance the new one, you must include the contingent about the same. Moreover, you need to provide a proper time frame to sell the old house. Generally, it is between 30 to 60 Days.
It is essential because the seller of the property you wish to buy will not wait for you to make the sale and collect the money. Just like you, they’d want to close the deal sooner rather than later. So, if you cannot meet their needs, they can sell the house to another party. However, this would happen only after the completion of time you have given in the agreement.
To sum it all up!
Adding all these conditions to your agreement will ensure that you are on the safe side. It’ll help avoid any confusion regarding the payment or other finances in the future. Besides these, if you wish to include any terms, you should discuss them with your attorney in Edmonton. They can help you finalize the contract that benefits both parties.