Linda Grissette

Step 8:  Handling Contract Issues

Here are some of the contract related issues you need to consider:

Earnest Money:  The amount of earnest money need is different in each sale.  Many people think that it's always better to have more in case the sale falls though, but in reality, they are many reasons that a buyer would get the earnest money returned if the sale falls through (for example, inspection problems you refuse to correct, inability of the buyer to get a loan, etc.).  If you demand too high of earnest money deposit, you may loose a buyer who has very little cash but is well qualified for a no money down loan!

Sales Price:  What you will accept for a sale price is a very person decision.  Make sure that you have considered all the expenses you will have at closing before your set your price.  If the buyer offers lower than you were anticipating, don't let your emotions blow the sale.  Remember, everyone wants to negotiate so they can get the best "deal" possible.  Keep negotiating!

Financing: We'll discuss financing in more detail in a later article, but we still need to discuss it, too.  You need to make sure that all the terms of the buyer's financing are in the contract.  For example, if the buyer asked you early in the process if you would pay closing costs for them and then doesn't write it in the contract, you need to be careful.  They may not have realized it had to be in writing.  If you accept the contract without it...and later they don't have enough money to pay their closing costs you'll have a problem.  Either they won't be able to close of the sale...or they will demand that you pay their closing costs since they talked to you about it and they thought you were going to pay the closing costs for them

You also need to have a reasonable loan approval date in the contract. 

Personal Property:  You and the buyer need to come to an understanding about what personal property stays in the house and what personal property is going with you.  This needs to be on the contract to prevent misunderstandings.

Closing Date:  The closing date needs to provide enough time for the loan processing and title work to be done.

Possession Date: The possession date is normally the day of closing or the day after closing.  If you decide to let the buyer move in early or they let you stay late, liability, insurance and financial issues relating to the possession need to be put in writing.

Taxes: Most taxes are pro-rated at closing.  This means that you will pay the buyer at closing for every day of the current year that you owned they house.  The buyer will then pay the taxes at the end of the year.

Inspections: Any inspections the buyer wants to have done on the home need to be addressed in the contract, as well as the deadline for any requests to be made.  The contract should also address what happens if the buyer decides there is too much work to be done on them home....or if you refuse to do all the work required.

Contingencies:  There are many different contingencies in a normal real estate sales contract.  Inspections, title work, financing....they are all contingencies.  But the contingency that concerns people is the contingency on the buyers current home selling and/or closing.  Be very careful with that form of contingency.

Title Issues:  Before a sale can be completed, the title needs to be clear!  The closing company (or title company, abstract company, etc) will do that for you, but what happens with title problem needs to be in the sales contact.

Commissions from as low as 3.95%...with aggressive marketing!

© 2006 - 2008, L.S.G. Enterprises, Inc.

All content of this web site is copyright protected.  Our copyright will be legally defended.  Linking to our content is always acceptable.  Besides the copyright issues, if you copy this content to your website, it will hurt BOTH of our websites!  Don't do it! 

NOTICE:  E-mail addresses on this site are provided for the use of our clients and potential clients.  Because of this notice, the harvesting and transfer of these e-mail addresses is a violation of the Federal CAN-SPAM Act.  Violators will be reported.

Privacy Statement   Linda's policy is to never give out consumer information.  If you give us your contact information, it will not be given to anyone without your permission.