Congratulations! You just purchased that new home study course. You followed the instructions. You found a good deal. You present your contract to the listing broker, and you get laughed at!
The reality is, real estate brokers don't like “seminar” forms. They are comfortable using the “standard” agreement, although the standard agreement is usually drafted to protect the real estate broker, not you. You must learn how to take any “standard” agreement and modify it to your liking.
The following are some essential clauses I use when buying a property:
“And/or assigns” or “and/or Nominees” – As the buyer, you want to have the right to assign your contract. By placing your name with the words, “and/or assigns,” you automatically give yourself that right. The words, “and/or nominees” is not as broad, but it has been interpreted as giving the buyer the right to place title in the name of a trust.
NOTE: If the contract contains an “anti-assignment” provision, you must cross that clause out.
Inspection Clause – Have the right to make the contract contingent upon your right to do a thorough inspection before a certain date. Make certain that you are not required to hire a professional inspector and that the inspection clause permits you to cancel the contract if there are things wrong with the property and the seller is not willing to fix these or reduce the price.
Choice of Escrow Company – As the buyer, insist on the right to choose the title or escrow company so that you remain in control. A conservative or uncooperative escrow or title company can make life very difficult if you are trying to do a creative deal.
Right to Extend – Most contracts call for a date certain for closing. If the buyer is not ready to close, the seller can hold him in default. Here are some tips for buying time: Make the closing date “on or about” June 1st. What does “on or about” mean? I'm not sure, but it certainly means LATER than June 1st! Have the right to extend the closing date if it is not your fault:
“Said date may be extended an additional fifteen (15) days if lender requires additional documentation, paperwork or actions from the buyer and said delay is not due to the fault of the buyer.”
Have the right to extend for thirty days by paying the seller the equivalent of one month's mortgage payment.