For Piney Point Village rental property investors, buying property is a major step in expanding your portfolio. For confident buying, it’s important to deeply understand the real estate purchase contract. The standard real estate purchase contract details the sale’s terms and conditions between the buyer and seller. This blog post will detail the crucial sections of a real estate purchase contract that every investor needs to know!
Earnest Money Deposit
Typically, the earnest money deposit is between 1% and 3% or 4% of the purchase price. This amount is put in escrow with your offer to show the seller you are serious about purchasing the property. The earnest money deposit is applied to the purchase price when the sale is finalized.
Offer to Purchase
The Offer to Purchase section initiates with an in-depth property description. It’s important to examine this description carefully to ensure it lists the correct property details you are bidding for.
It will probably also include a list of items that come with the sale and those excluded from it. It’s equally important to pay attention to these lists because the seller can exclude almost anything from the sale.
Purchase Price
The purchase price section in the real estate contract is among the most crucial parts. This section details the amount you agree to pay to secure ownership of the property.
It’s also crucial to note any extra fees or costs related to the sale, such as the seller covering closing costs. Additionally, this section explains your payment method for the property, whether through financing or cash, and the cash amount expected at settlement.
Seller Disclosures
The seller disclosures section lists any known issues, whether they are physical or legal, with the property. This section includes any pending lawsuits, environmental issues, or the need for a new roof.
You should generally factor in this information when making an offer. If known issues aren’t disclosed by the seller and are found post-closing, the seller might be liable for damages.
Contingencies
Another important section of a real estate purchase contract is the contingency section. It details all the conditions that must be satisfied before closing, including securing financing, getting an inspection, and having a clear title.
These contingencies are generally waived automatically if the buyer fails to act. However, it’s vital to review these contingencies to know what to expect and the time frame for meeting them.
Inspection Period
The inspection period is the time after you submit the offer when you can cancel the purchase contract for various reasons. For example, you might find a significant defect with the property and choose not to purchase it, or you may have buyer’s remorse.
The inspection period permits you to cancel the contract without repercussions if you discover something missed in the initial inspection.
Assessments and Financial Obligations
This part covers any present or future assessments and the financial obligations associated with them. If a major project is proposed in the property’s area, this section will outline the project and any related costs.
It might also detail any outstanding fees you’ll be responsible for at closing, including property taxes, HOA fees, special assessments, or utility bills. It’s vital to thoroughly review this information to comprehend any financial obligations you may incur from the purchase.
Closing and Settlement
This part of the real estate purchase contract outlines the date and location for finalizing the sale. It usually outlines an anticipated date for the transfer of the property. Buyers often assume they can take possession at closing, but this isn’t always the case. Consequently, it’s important to carefully review the closing section of your contract to prevent any unforeseen timing issues.
Offer and Time for Acceptance
One of the concluding sections of a real estate contract usually includes important dates to note, like the offer’s expiration date and time, as well as contract deadlines. The real estate purchase contract becomes valid only if the seller accepts your offer. The offer and time for acceptance section indicates how long you have to make your offer, the seller’s period for acceptance, and when the buyer’s responsibility for providing a deposit starts. This section may also detail when the contingencies begin and the timeframe to meet these conditions.
Acceptance/Counteroffer/Rejection
When you have reviewed the real estate purchase contract and are ready to submit your offer, you need to sign at the bottom to show acceptance or rejection. Once the seller accepts your offer, the purchase agreement is legally binding, and you must move forward with the transaction as outlined in the contract.
However, if the seller opts to make a counteroffer, responding to your initial offer, this paragraph will be included in your purchase agreement. The counteroffer from the seller may include different terms or suggest a revised purchase price. Should you accept the counteroffer, you need to sign and return it to indicate acceptance.
An expert in the rental market can be very useful for guiding you through the more complex aspects of buying an investment property. Real Property Management Luxury can guide you through every step, from the initial purchase to ongoing property management in Piney Point Village. Get in touch online or call 346-275-3115 to learn more about what we offer investors.
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