Shopping for a new home can be an exhausting and overwhelming experience, but it's worth it when you find your dream property. After you make a formal offer on your potential new home, however, you'll end up reading pages and pages of documents written in frustrating legalese that can be tedious.
This is your contract, and it dictates the terms of the sale. Outside of the purchase price and address of the property, there are a host of other items that should clearly be spelled out in the document. Here are some important things that should be addressed:
Unless you're planning to tear the home down and build a new one, it's imperative that you invest in a home inspection. Trained inspectors will determine if there are pests or lead paint, check the plumbing, electrical components and overall structure of the home. If such inspections reveal expensive or irreparable flaws, you should have a contingency clause that states that you're permitted to retract any offer previously made.
Unless you're able to purchase a home in cash, you'll need to take out a mortgage to pay for your new property. This means that you must see where you fit as far as the interest rate that's being offered based on your credit score and current income, and determine if your offer is viable. If you're seeking a VA loan or an FHA loan, that should also be specified in the contract. If you're able to pay for the property in full, that should be placed in the contract, because it's a much better alternative for sellers—and makes your offer stand out.
Closing costs are common fees that are part of any typical real estate deal. These include escrow, recording, title search and notary fees, transfer tax and title insurance. The contract should clearly stipulate which party pays for which expense. While it may seem strange, it's common now to ask the seller to pay a part of the closing costs.
The closing date is when the conveyancing of ownership officially takes place. You and the seller will need to decide how long it will take to complete all the steps necessary to seal the transaction. This, of course, depends on certain conditions. Is the buyer subject to a rental lease? Does the seller have a new home? Are the funds from the sale of the buyer’s current home going to be needed to purchase the home in question? The lender, underwriter, attorneys and title company can hold up proceedings as well, so this is something that needs to be planned for.