I’m a newbie and I really want to cover my bases on the Purchase Agreement. I am in Texas and I will be using a TREC ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE). Should I cover the following items in the Addendum:
inspections; 2) appraisal; 3) title search results; 4) right to extend closing date; 5) access to property to show it to investors; 5) and the Seller’s acknowledgment that they understanding that this Purchase Agreement will be assigned to an investor, etc. ?
Please give me your thoughts and the verbiage I should use to make this Contract more buyer-friendly!!!
The inspections are handled in the standard contract. You get an option period to inspect. Make this as long as possible and as cheap as possible to be buyer friendly.
In a standard deal the financing is usually subject to the appraisal coming in at the selling price and if not adjustments can be made to the selling price or the down payment or the deal be cancelled because the agreed upon financing could not be obtained. The same can be true with a buy and rehab deal as long as you make it subject to a certain amount of financing. I include all the financing including the rehab.
The title search portion of the standard contract spells out all anyone will ever need in a contract unless it is a big time commercial deal. You are given a specific time frame to make objections to the title search and if there are non fixable problems you can cancel the agreement and get the earnest money refunded.
You can put a special provision in regarding the extension of the closing if need be or sign a modification of the contract. An extension is not always given by the seller. You may need to put up more non refundable earnest money or pay more for the property as well. It would be smart to add a provision for this in the beginning or get longer up front.
The right to inspect gives you the right to enter the property during normal times but not excessively. It would be easier of course to buy a vacant property and get a key for the inspections which would get you easy access for investors as well.
Contracts are assignable even without the and or assigns clause. This can be a delicate detail at first. Most sellers and agents want you to have a pre-qualification letter from a lender before you make an offer and some sellers (mostly REO lenders) will not let you assign the contract. It can be a difficult game to play. Often times I do not let the seller know that I am assigning and tell them I have some partners coming to look. Then I say that they did not want to partner but made me an offer that I could not refuse or that I could not get the loan approved and my friend wanted the house. A little white lie to save face and keep them from getting upset that you are selling the house for more than they were asking.
Thank you for responding so thoroughly to my questions about the Purchase Agreement Addendum. Being new in this business, I think the most sensible thing to do is try to cover all my bases when it comes to the Contract. Upon conducting a search for “addendum” and “contingencies”, I was surpised to find that there was not a lot of information referencing this topic/issue. In addition to that, I didn’t get a lot of input or helpful information from forum members who, in my opinion, should be extremely knowledgeable in this area – thus, having lots of advice to share. Even though I’m in Texas, my questions were not specific to Texas but are germane to any state.
In my observation, most posts warrant a rapid response because the member seeking advice is either in the midst of a deal or about to commence one and desperate for a reply with no time to spare. If other forum members would keep that in mind and act accordingly, this forum would be most effective and valuable to the members and those of us seeking to learn and share.
Nevertheless, I appreciate you taking the time to respond and I look forward to sharing my knowledge and experiences, too.