Hi Everyone, what addendum do you put into your purchase and sale contracts that are not in standard contracts?
it all depends on the type of deal your putting together. when you say this what type of deal is it??
Just a standard wholesale deal where I am buying from a home owner and then turning around and assigning my contract to a cash buyer for an assignment fee.
That’s an interesting question and the answer isn’t that simple, since it’s a matter of the type of transaction/negotiation we’re attempting to close on.
That said, we consider what type of deal we want to close on. So, we read our purchase agreement to see if it addresses all the terms we need, to make our specific deal-type work, or not. If not, we write up an addendum item that solves the issue.
For example, on a wholesale transaction where we needed extra time, or to ensure that we ‘had’ enough time to find a buyer, we added an addenda item that read, “This contract is subject to: Sellers delivery of “x” paperwork (fill in the blank). Buyer reserves the right to inspect and approve (fill in the blank) in writing, within ten business days, or this contract shall become null and void.”
What did this do? It gave us two solid weeks (or at least 12 calendar days) to do whatever we were intending to do. “Business days” of course includes only Monday through Friday, but not Saturday, or Sunday.
So the weekend days become ‘freebees.’
Each transaction type needs a specific addenda/um. Lease/options need their own addenda. Sub2 needs it’s own. Assignment contracts need their own, etc.
The next thing is to have the addenda/um pre-printed and ready to use. The only thing we want to do is fill in blanks (and have as few blanks as possible). Fewer blanks means that as many terms as there might be, the rest are “assumed,” per the text of the addenda, and not something to be negotiated.
We call, “spaces/blanks,” “points of negotiation.” And we want as few of those as possible.
So, that means all our contracts and potential addenda/um have as few negotiable items as possible, and the agreements are ready for approval as soon an agreement is achieved.
I remember a story that Barney Zick told regarding the importance of having the paperwork ready as quickly as possible, once an agreement has been reached. (The details may vary, but the gist of it is the same).
A business owner wanted to buy underground storage in KCMO. It took a lot of negotiations, but once they were done, the business man wanted all the documents ready to sign within just an hour, or two, so that there was less time for anyone to second guess the deal, or change their minds.
As a result the businessman, split up the 100-page contract among a typing pool of about twenty five typists. Each typist completed her part of the agreement, so that the entire agreement could be presented for signatures, within two hours of their original handshake.
This is what you want. Once your negotiations are complete, you want the documents ready to sign, right there and then. You don’t want to give the other party more time/chance to come back the next day, or allow for the seller’s “uncle Harry” to weigh in, and find yourself renegotiating the agreement …only because the paperwork wasn’t ready to sign.
That doesn’t answer your question very well, but only you can really answer your question. And that’s after you’ve read through the purchase agreement(s) you already have, and consider what you actually want to accomplish …and then have it all ready for a prospect to sign on the spot.
All that said… The only reason we really need an addenda, per se, is because we’re using someone elses contract. For example if we’re using the uniform contract from the dept. of real estate, we have an addenda that supersedes whatever we don’t like.
Using the dept. of real estate’s contract makes some sellers more comfortable about the ‘agreements’ themselves, so we do what makes them feel comfortable without giving up what we have to have in the agreement.
Otherwise, we use our own contracts, and include all the usual addenda in the agreement itself, so there’s no need to include an addenda.
So again, a custom purchase agreement won’t really need an addenda, as such, since we’ve anticipated, and already included any negotiable items in our original agreement.
Hope that helps.
Thanks Javipa and evryone else that posted, it is very much appreciated.