Contract For Sale Of Real Estate (Page 5 of 8) in pdf

An "As Is" clause

Some home sellers insist on selling their homes "as is." That means the seller and realty agent

make no representations or warranties and won't pay for any repairs. However, the seller and

realty agents must still disclose any known home defects to the buyer. Avoid agreeing to an "as

is" clause if you want the seller to pay for repairs of known serious defects.

When describing the purchase terms, don't specify "All cash to seller" if you require a new

mortgage to provide that cash. Be sure your offer contains a clause making your offer contingent

on approval of the mortgage. Even if you got preapproved for a mortgage, the lender can avoid

making the loan by low-balling the appraisal.

The mortgage you want to obtain should be specified with detail, such as a new 30-year fixed

interest rate mortgage of at least $100,000 with interest not exceeding 8 percent, a loan fee of not

more than 2 percent, and a monthly payment not exceeding $733.76. If you want the seller to help

finance the sale, by carrying back either a first or second mortgage, here is where you specify the

terms you want.

Personal property

If you want any personal property included in the home sale, such as the kitchen appliances, be

sure to specifically itemize them in your purchase offer. For example, specify the "General Electric

side-by-side refrigerator with electronic monitor now on the premises." This stops the seller from

substituting inferior replacement personal property at the last minute.

Time for acceptance of your purchase offer

Your purchase offer should contain a short time for the seller's acceptance. Twenty-four hours is

usually sufficient unless the seller is out of town. Don't make your offer valid for a long time

period because then it will be "shopped" by the realty agent to see if a better offer from another

buyer can be obtained.

•A professional inspection

The buyer should pay for the professional inspection because it's for the buyer's benefit.

Accompany the professional inspector. When a defect discovered is serious, such as a cracked

chimney, expect the seller to pay for the repair. If the seller refuses to pay for major necessary

repairs, disapprove the report and get your good faith deposit refunded.

•Seller's disclosure of known defects

Many states, led by California and Maine, now require home sellers and their realty agents to

disclose in writing any known defects in the residence. If your state requires seller disclosure of

defects, your purchase offer should be contingent upon your approval of the seller's disclosure.

•Liquidated damages clause

This clause specifies maximum damages a defaulting buyer must pay to the home seller if the

buyer doesn't complete the purchase as agreed. Some state laws set maximum liquidated damages.

As a buyer, you may want to agree to liquidated damages so you can't be held liable for more than

the specified sum if you default.

•Arbitration of disputes clause

Contract For Sale Of Real Estate Page 5