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THE PURCHASE CONTRACT

THE PURCHASE CONTRACT

“The world is a dangerous place to live – not because of the people who are evil but because of the people who don’t do anything about it.” – Albert Einstein

When you are buying the single largest purchase of your life, it is important that you get the terms of the sale in writing. Like the famous movie magnate Sam Goldwyn once said, a verbal agreement (or hand-shake) isn’t worth the paper it’s printed on. And despite the advent of technologies such as the Internet, even e-mail isn’t good enough, at least not until fool-proof (and affordable) personal identity software is available. You may be able to use the phone, e-mail, or fax machine to volley the negotiations back and forth, but when it comes to signing on the dotted line, make sure you Fed-ex the sales contract and that both parties sign in writing, and make subsequent changes in writing. According to the Real Estate Buyer’s Agent Council, the purchase contract is a “legally binding document that sets forth the terms of the sale, establishes the rights and obligations of the parties involved, specifies the actions to be taken in order to close the sale, and establishes the time frames for those steps to be completed.” The contract form is typically filled out by the real estate agent, buyer’s attorney or the buyer and seller if no agent is involved. Standard pre-printed forms contain such agreements as price, closing date, financial terms, and contingencies. Changes can be made to the contract by crossing out the part in dispute, circling the change and having both parties initial the change. REBAC advises buyers to be sure that they understand all of the terms of the contract before signing. Some of the items that you may be agreeing to when you sign the pre-printed form may include:

  • *What personal property will be included or excluded from the sale.
  • Who will pay for required repairs or retrofits.
  • What the seller’s disclosure obligations will be.
  • What the seller’s obligation to maintain the property will be.
  • What the seller is warranting about the property.
  • What the buyers inspection rights will be.
  • What will happen in the event either party does not comply with the contract.
  • What the parties legal rights and attorney fee provisions will be in the event of a breach of contract

*Reprinted with permission from the Real Estate Buyer’s Agent Council (REBAC.)

You should try to obtain forms that are most commonly used in your area of the country. For example, in parts of the northeast, an attorney handles the seller’s side instead of the Realtor. In parts of the south and west, agents act as legal fiduciaries. It is easy for buyers and sellers to focus most on issues such as price, terms, and dates for inspection, appraisal, and closing, but losses can occur on both sides through missing the small details. Most misunderstandings occur between buyers and sellers when some terms are not fully disclosed. For example, do not assume that any moveable object such as window treatments, refrigerators, ceiling fans, chandeliers or special ornamentation will remain with the house. If any of those features are significant to you as a buyer or seller, you must include or exclude them clearly in the contract. By reviewing and understanding the purchase contract form ahead of time you can strengthen your negotiating position, protect yourself from incurring unnecessary costs or problems, and have a better understanding of what you will need to do to conclude the sale.

Where to get real estate forms?

Since real estate is a state-regulated transaction, you can go to the search engines and key in “real estate forms – your state.” A general inquiry will pull up the occasional state, but mostly you will find forms marketed to Realtors. Another approach is to go to Realtor.com and click on Realtor Associations. Go to the association that represents your city or town, and call them or e-mail them to ask for forms. If your city is not represented, click on the state association. For example, the Washington Association of REALTORS® sell residential sales contracts in packages of 50 for about $53, but they do not sell individual forms to consumers. Another on-line solution is to contact the Real Estate Library and the ‘Lectric Law Library. These sites have a wealth of information about all aspects of the real estate transaction, including access to forms. You can also contact a local attorney that specializes in real estate transactions. Even if you are buying or selling a home without the benefit of an agent, it is in your best interest to have someone look at your legal exposure in a sales contract of the magnitude of a home purchase.

You can also check the real estate section and classified section of your local newspaper to see if there is a local business that sells forms. You may also find forms from your local property taxing authority. Since the forms vary extensively from state to state, it is in your best interest to contact your local real estate board or state association to get a list of all the documents which should be included in any real estate transaction.

If You Are A “For Sale By Owner” Then You Need to Know This! If you are a seller attempting a “For Sale By Owner” you will need to know that these companies that help “For Sale By Owners” do charge for the service of putting your home on their website. You will be the one who has to take the pictures, make the flyers and take off from work to accomodate the potential buyers so they can come to view your home. If you get a buyer, you then have to be the one to check whether or not the buyer can truly afford your home and scrounge up the proper forms to execute a contract. Then of course, to make sure all is legal, you’ll need a title company to check the title of your home, and a lawyer to fnalize all the paperwork.

Whew, that’s a lot of work! Why not just make your life simple from the get go. When you hire a Realtor, they advise you on how to prepare your home so it show well. They will create all the advertizing – after all, the big companies like RE/MAX have plenty of software for thier agents to create advertizing pieces.

Then again, a big company like RE/MAX is not just statewide, or nationwide, they are global. So not only does your home get put on the local and national advertizing avenues, but because RE/MAX is global people in Austrailia can view listings in America. and visa versa.

Aside from this bit of great advertizing, every RE/MAX agent has their listings enhanced on Realtor.com – the largest public real estate website and they sindicate their listings to 40 other websites as well. Couple this with their exceptional training and up to the minute technology, why would you go it alone, or with any other agency besides RE/MAX?

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About Mme Jocelyne

Hi, I'm a transplanted northerner–(born and raised in New York to French immigrants–Oui je parle Francais)-living in Florida for 20 years. In the 70's I worked as a realtor in the Bronx – City Island to be exact. Then I started a family and didn't keep up my license. I aspired to a career in architecture, so I went to New York Institute of Technology for three years, moved to Florida and finished my degree at the University of Florida in Gainesville. After 10 years of working in my dream career I sustained an injury to my shoulder. This injury never healed because I was constantly on the computer doing cad design. I finally decided to make a career change – something where I could use my training as an architect. Needless to say, I was worried – where will the money come from? How will I be able to afford my career change? But, I put my faith in God and went for it. It’s the best move I ever made, other than my husband, children and dogs.

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