Feb 3, 2010

Most Important part of a Real Estate Contract

I've been negotiating a couple of contracts over the past week and it got me thinking ...
What do most people think is the most important part of a real estate contract?
Is it the price?
The signatures?
The contingency clauses?
In my opinion, its the terms. Terms include possession date, closing date, earnest money, ... and most importantly payment. How the buyer intends to pay for the property is an issue that too many sellers (and their agents) do not give enough attention. Even before the mortgage process got so tight, the financing terms were, and are, most important.
What if I told you that I would pay you $5 million for your $500,000 house, IF I could set the terms for payment? The price would certainly be right and I'm flexible on the dates, etc.
Would you take it?

If so, then let me know and we've got a deal. I'll pay you a $5 down payment and a dollar a week. Those are my financing terms.
But really, the financing terms (usually attached as a financing addendum) can make or break a contract. If the buyer is attaching a financing addendum, as most buyers do, the entire contract is contingent on the buyer obtaining the financing spelled out in the addendum. For example, if it states that they are getting a 90% jumbo loan at 5% interest, then they'd better have excellent credit. If they can't get the financing, then your contract can be cancelled and the buyer can get their earnest money back. Of course, it all depends on what terms you agreed to in the contract.
No one wants to see a deal fall through due to financing terms. But it happens all the time. And as a seller's agent, the last thing I want to happen is to have a sale fall through as we're heading to closing. Once the moving van is loading and property has been off the market (as a pending sale), its painful to go back to square one.
So, Mr & Mrs Seller; When you get that offer on your house, check those all important financing terms. They could be the most important part of your real estate contract.

[where: 75230]

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