Writing The Contract – Required Items
1. The date and amount of deposit (earnest money).
2. Your name as buyer and the property owner's name as seller.
3. The total purchase price. (are you using an escalation clause?)
4. Full legal description (warranty deed) and street address of the property.
5. The brokers and others involved in the sale; who is representing what party?
6. The options available to both buyer and seller should either party default.
Key Contingency Clauses
Your offer contract should also contain important protective and escape clauses making the entire agreement contingent on, their fulfillment.
Ensure that your earnest money (a check you give to show your serious about buying) will be deposited in a trust account or with a neutral third party, such as a title company, escrow service or attorney acting as an escrow agent.
Returning Earnest Money
Set out any conditions for return of your money, including how quickly you'll get it back if the offer expires or you withdraw it, or if for some reason the seller decides not to sell. Make sure you know how you can get your earnest money back and when it may be deemed as non-refundable.
Deed and Title Condition
Your offer should state the type of deed and condition of title you'll accept from the seller. Your contract should also make clear what actions the seller must take to deliver a good title by settlement, and what recourse you have should that not occur.
Make your offer contingent on getting a written loan commitment within a specified time and at terms agreeable to you.
Settlement Date and Possession
The sale should be made subject to a settlement date and when you will be entitled to take physical possession of your new home. Settlement usually correlates with the length of time that's required for a title search and mortgage approval -- typically 30 days. Possession usually occurs immediately after settlement.
The contract usually specifies the attorney or title company that will perform final settlement services.
Sale of Current Residence
If your purchase of this house is contingent on the sale of another, this should be carefully stated.
Response Time Limit
Your contract should require the seller to accept the offer in writing within a certain time -- usually no more than 24 to 48 hours. This may vary by market. Contract is void if the seller doesn’t respond before the deadline.
This contingency clause gives you the right to have the property inspected (this will cost you about $400 to $500) and allows you to withdraw your offer if the inspection report isn't satisfactory to you for any reason. It also allows to request repairs be made or allow for price adjustments to pay for any necessary repairs.
Lenders require the home to be free of termites, so be sure to get a termite inspection and have the seller pay for a treatment if any termites are found. This is not required in all states.
What Goes with the House
Specify what furnishings -- such as curtains, rugs, chandelier, and so on -- are included in the sale.
Condition of House at Settlement
Specify what must be in demonstrable working order at the time of settlement, as verified during a walk-through of the premises a day or so before settlement.
The list could go on, but every additional condition runs the risk of making your offer more complicated and less appealing.
Questions For A Home Inspector