Buying or selling a home is one of the largest financial transactions of your life! Most would agree, it’s also the most stressful and unnecessarily complicated processes out there. However, Real Estate is very simple when you break it down piece by piece, which is exactly what we’re going to do!
Once you’ve found a home and are ready to make an offer, do you know what contingencies to include to ensure your maximum protections as a buyer? Most buyers are simply excited picturing themselves in the house and making it their home – they are only concerned about what price to offer. But, there is quite a bit more to it than that!
Real estate laws vary by state. In Washington, we use a form vetted by lawyers that we pull from the Northwest Multiple Listing Service. The “meat and potatoes” of the offer can be found on the 5 pages of Form 21. There are two parts to this form. The first part is page 1. The second part is pages 2-5 defining in explicit detail the terms on page 1. Here’s a snap shot:
Your Realtor should be able to give you a summary of what each item means and make sure you understand it / give you time to read it and provide you with a copy.
So let’s talk about what is even on this form!
Date – Dates are important in real estate. Have you heard the term, Time is of the Essence? If your agent is not on top of these, you could find yourself in a sticky situation between two bad choices!
Property / Legal Description – Make sure you’re buying the right house!
Buyer Name / Seller Name – Make sure YOU are buying the right house, and that seller can legally sell it!
Purchase Price – You can offer whatever you want, but if you lowball you could get blackballed by the seller!
Earnest Money – This one is a biggie! In the past, if you backed out of an offer after all your contingencies were satisfied, seller could come after you for EVERYTHING you have. Now, it’s limited to the earnest money. The more you put on the line, the more seller knows you’re serious!
Included Items – Standard items include appliances like a refrigerator/stove/dishwasher, etc.
Title Company / Closing Agent – Who is going to make sure the title is legal and not clouded (has ‘other ownership claims’). If this is not done, you might have just bought a house that couldn’t legally be sold!
So your head doesn’t explode, we’ll end it here and continue next month. If you have any questions about this form, how to protect yourself during a real estate transaction, or even general market trends, I know a guy!